GRAINS – Soybeans Gain 1% and Wheat Strengthens After Fed Decision, Reports Reuters

Soybeans Up 1%, Wheat Rises 0.8% Following Fed Decision

Grain markets are reacting to recent developments, with soybean futures in Chicago increasing by more than 1% and wheat rising by 0.7%. This movement follows the U.S. Federal Reserve’s announcement to boost liquidity in financial markets through bond purchases.

On Wednesday, the Fed embarked on a new initiative to support the struggling U.S. economy, committing to acquire $600 billion in government bonds, despite concerns that this strategy may have adverse effects.

"We’ve seen a positive start across the commodity spectrum, with soybeans, corn, and wheat all rebounding after the Fed’s announcement, which is expected to weigh on the U.S. dollar," commented Luke Mathews, a commodity strategist at the Commonwealth Bank of Australia.

As of 0711 GMT, Chicago Board of Trade (CBOT) soybeans for November delivery rose by 1.08% to $12.40-¾ per bushel, while December wheat gained 0.8% to reach $6.95-½ per bushel. Additionally, CBOT December corn was up 0.4% at $5.83-½ per bushel.

The U.S. dollar remains close to a ten-month low against the euro and a 28-year low against the Australian dollar, inching back toward a record low against the yen following the Fed’s decision to purchase more government debt.

All eyes are now on the upcoming U.S. Department of Agriculture (USDA) report that will address global agricultural demand and supply, scheduled for release on Tuesday.

"The grain markets are shifting their focus to the USDA crop report," stated Mathews. "While external markets will remain significant, discussions around possible supply reductions in the U.S., especially concerning corn, are expected to increase."

Analysts anticipate that the USDA may further lower its forecast for U.S. corn crop production after a 4% reduction last month attributed to late summer heat impacting yields. The USDA’s forecast for U.S. soybean harvests could also see a decrease following a 2% drop in October, influenced by high temperatures at the close of summer.

Informa Economics has projected the 2010 U.S. corn crop at 12.592 billion bushels, with an average yield of 155.0 bushels per acre, a decline from the previous estimate of 12.9 billion bushels. Conversely, Informa raised its soybean production forecast slightly to 3.425 billion bushels, suggesting an average yield of 44.6 bushels per acre.

Concerns over dry weather in the U.S. wheat belt have further complicated the grain landscape, which has already been destabilized by a severe drought in Russia leading to an export embargo. However, recent forecasts indicate the possibility of rain in Kansas, the leading wheat-producing state in the U.S.

Prices at 0711 GMT:

• CBOT Wheat: $695.50, Change: +0.76%
• CBOT Corn: $583.50, Change: +0.43%
• CBOT Soybeans: $1251.25, Change: +1.11%
• CBOT Rice: $14.77, Change: +1.55%
• WTI Crude: $85.56, Change: +1.03%

Currencies:

• Euro/USD: $1.413, Change: +1.18%

Most active contracts for wheat, corn, and soy are measured in US cents per bushel; rice is priced in USD per hundredweight.