Chicago Grains Report - Tuesday

16/08/16 -- Soycomplex: Beans closed a little lower on consolidation from yesterday's rally. China was back in the market booking 119,000 MT of US beans for new crop delivery under the daily reporting system. The trade struggles to weigh up the impending likely record 2016 US soybean crop against record demand from China, accompanied by a significant slowdown in exports from South America. US crop conditions (72% good to excellent) are the best for this week since 2004. Some question whether conditions are too wet to achieve the record yields and production that the USDA now has pencilled in. "Ultra-wet conditions have become detrimental for crops in some areas in August, washing fertilizers out of the root zone, even drowning plants in the low lying areas. Recurring showers the past several weeks have grown excessive in Illinois, the leading soybean state, where 2- 3 times the normal rainfall has developed. Excessive rainfall is hampering crops in Minnesota and Missouri, as well. Kentucky was extremely wet, receiving 3 times the normal rainfall the past few weeks. The new forecast continues very wet," say Martell Crop Projections. Sep 16 Soybeans settled at $10.19 1/2, down 4 1/4 cents; Nov 16 Soybeans settled at $10.07 1/4, down 2 cents; Sep 16 Soybean Meal settled at $336.70, down $2.90; Sep 16 Soybean Oil settled at 33.38, up 17 points.

Corn: Corn closed flat to 1 cent higher. Fresh news was limited. As with beans, not everyone is convinced that the US can bring in a record 175 bu/acre average corn yield this year. "Corn benefits from heavy rainfall in July, strong showers promoting successful pollination in corn. This insures that a large number of kernels would develop on the ear.  'Rain makes grain' is the common phrase. However, rainfall has continued heavy in August, perhaps becoming too much of a good thing. Along with the warm night temperatures, corn prospects have declined in Illinois and Indiana," say Martell Crop Projections. Heavy rains continue today and are expected throughout the 7 day forecast for the south which will halt almost all harvest activity there. Warmer than normal night-time temperatures continue for the Midwest Midwest for another 5 days before they give way to much below normal temperatures in a wet 6-10 day forecast. Germany's DRV lowered their forecast for the 2016 corn crop there by 0.5 MMT from last month to 4.0 MMT. Sep 16 Corn settled at $3.27 1/2, up 1 cent; Dec 16 Corn settled at $3.37 1/4, up 1/4 cent.

Wheat: Wheat closed narrowly mixed across the three exchanges. The US winter wheat harvest is just about done and the spring wheat harvest approaches halfway. Demand for US wheat is sluggish, but improved prospects are hoped for following a large-scale downgrade to the crop in Europe. Germany's DRV today lowered their forecast for 2016 grain production there from 44.7 MMT to 44.9 MMT due to "significantly lower estimated yields per hectare for all cereals. This year's result is more than 8 percent below last year's value," they said. "Reason for the disappointing results are in particular the adverse weather conditions in recent months," they added. Wheat production was forecast at 24.2 MMT versus 25.4 MMT previously and some 9% below last year. Winter barley production is seen down more than 9% at 8.8 MMT and spring barley output declining by almost 9% to 1.8 MMT. There are no such problems in Russia though where IKAR raised the bar for grain production this year by 2 MMT to 116 MMT, upping wheat 1 MMT to 70 MMT. These estimates are still quite conservative and could be raised again, they said. Sep 16 CBOT Wheat settled at $4.23 1/2, up 1 1/2 cents; Sep 16 KCBT Wheat settled at $4.11 1/4, down 1/2 cent; Sep 16 MGEX Wheat settled at $5.16 1/2, up 1 1/4 cents.