Grain and soybean futures were mixed in a choppy session on Friday as traders digested a government supply-and-demand report before refocusing on domestic weather threats.
The U.S. Department of Agriculture forecast on Friday increased loads of American soybeans sitting in domestic bins, as growing South American production limits farmers' ability to sell the surplus in the global export market.
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The monthly report was "a snoozer," said Jeff Kaprelian, trading desk manager at advisory firm the Hueber Report in Sycamore, Ill. "The market was definitely anticipating an increase in South American production, but that stretched it a little further than we thought."
The USDA forecast domestic soybean stockpiles rising to 495 million bushels at the end of the 2017-18 crop year from 450 million in 2016-17.
The agency also raised this year's already-record Brazilian soybean production estimate to 114 million metric tons from 111.6 million in May, a larger-than-expected increase.
The danger of such a mammoth South American harvest is that U.S. farmers see "the fat tails of Brazil exports cutting into our export season," said Craig Turner, senior broker at Daniels Trading in Chicago.
Soybean futures for July delivery were mostly steady after the report, closing 0.4% higher at $9.41 1/2 a bushel at the Chicago Board of Trade. Analysts say the prospect of a tough year ahead for U.S. oilseed exporters was largely priced into the market, and it will probably take a significant weather problem to push futures out of their trading band.
A small increase in domestic wheat production surprised some who had expected a damaging bout of late-season snow last month on Kansas grain fields to limit the agency's estimate. The USDA raised its forecast to 1.824 billion bushels of wheat this year from 1.82 billion bushels in May.
That pressured wheat futures, which have recently rallied on the back of concerns about a drought building in spring wheat-growing states like the Dakotas. CBOT July wheat futures fell 0.8% to $4.45 3/4 a bushel.
Corn futures, meanwhile, rose to a fresh 11-month high on Friday. Traders looked past largely unchanged USDA stock-and-production estimates to a sweltering hot weekend in the Midwest, which is expected to stress the growing crop. Analysts are concerned that heat and a lack of rain in the coming weeks could dry out the soil ahead of critical yield-forming stages.
The report had "nothing to take the eye off the weather," said Arlan Suderman, chief commodities economist at brokerage INTL FCStone in Kansas City, Mo. "Watching weather updates is still going to be the primary driver."
CBOT July corn futures gained 0.5% to $3.87 3/4 a bushel.
-Jesse Newman contributed to this article.
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(END) Dow Jones Newswires
June 09, 2017 15:00 ET (19:00 GMT)