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Corn eases from 1-week top, forecast of lower US yields limits losses

Chicago corn futures ticked lower on Wednesday as the market took a breather after climbing nearly 3% in the last session on a forecast of a larger-than-expected reduction in U.S. yields.

Wheat fell for the first time in three sessions, while soybeans eased. The most-active corn contract on the Chicago Board of Trade was down 0.3% at $4.26-1/2 a bushel by 0226 GMT, having risen 2.9% in the previous session.

Wheat lost 0.3 percent to $5.16-1/2 a bushel, after ending Tuesday up 2.1% and soybeans were down 0.2% at $8.58 a bushel. The U.S. Department of Agriculture in a monthly report on Tuesday slashed its corn yield projection by 10 bushels an acre from May, or 5.7%, to 166 bushels.

Analysts had expected a smaller decline to 172.4 bushels. The drop, along with a 3-percent decrease in the USDA’s expectation for how many acres farmers will plant, left the government’s production estimate at 13.68 billion bushels. That would be the smallest harvest in four years.

“There is likely more to reduction in yields to come as our estimates now have the U.S. corn loss at 40-50 million tonnes, so the USDA will show more reduction in the next few months,” said Ole Houe, director of advisory services at brokerage IKON Commodities.

“It is important to note that globally the world corn stocks have fallen from 350 million tonnes four years ago to 290 million in the latest USDA report.”

The agency on Tuesday kept its production and yield estimates for soybeans unchanged from last month, surprising analysts who were generally looking for declines.

The crop is typically planted after corn. Farmers who were unable to plant corn could grow soybeans on those acres instead, adding to supplies.

The USDA said late on Monday that it was looking into ways to allow farmers who have been unable to plant crops due to rain to qualify for farm aid payments linked to trade disputes. Commodity funds were net buyers of CBOT corn, soybean, soymeal and wheat futures contracts on Tuesday, and net sellers of soyoil contracts, traders said.

Grains prices at 0226 GMT

 Contract    Last    Change  Pct chg  Two-day chg  MA 30   RSI
 CBOT wheat  516.50  -1.50   -0.29%   +1.77%       474.36  62
 CBOT corn   426.50  -1.25   -0.29%   +2.59%       393.71  63
 CBOT soy    858.00  -1.25   -0.15%   -0.06%       844.60  49
 CBOT rice   11.53   -$0.05  -0.39%   -2.04%       $11.27  49
 WTI crude   52.39   -$0.88  -1.65%   -1.63%       $58.77  
 Euro/dlr    $1.133  $0.000  -0.02%   +0.13%               
 USD/AUD     0.6950  -0.001  -0.14%   -0.16%

Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential

Source: Reuters (Reporting by Naveen Thukral; editing by Richard Pullin)

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