* Crop, yield cuts for corn less than expected
* Soybeans rise on cuts to crop, yield
* Soy futures daily gain most in two weeks
(Adds wheat tender by Egypt, analyst comments, updates with
By K.T. Arasu and Tom Polansek
CHICAGO, Sept 12 U.S. corn futures tumbled 1
percent to close at a two-month low on Wednesday as the U.S.
government's monthly assessment of crop damage from the worst
drought in half a century fell short of trade expectations, as
did its estimate of buffer stocks.
Soybean futures soared 2.6 percent for the biggest daily
gain in about two weeks and snapped a five-day losing streak
after the U.S. Department of Agriculture cut its estimate of the
crop in the world's top grain-exporting nation.
The department also cut its yield estimate for soybeans,
pouring cold water on some trade expectations for an improvement
after rains last month in the northern and eastern Midwestern
USDA reduced its estimate of corn used for feed in the
just-ended 2011/12 marketing year (September-August) by 150
million bushels. Corn exports have tumbled in recent weeks as
end-users turn to other suppliers and alternative feed.
The department pegged corn ending stocks next summer at 733
million bushels, above trade estimates for 592 million bushels.
Soybeans were on track to test the record $17.94-3/4 per
bushel hit last week by the spot month. Traders said even
higher prices were needed to temper demand, with the
stocks-to-use ratio set to be the lowest in nearly five decades.
"Soybeans are like the sleeping giant. Prices are high but
so many things are still unknown," said Brandon Kliethermes, a
senior economist with His Global Insight agricultural service.
"It's still a guessing game for soybean yields, unlike corn
which is being harvested," he said, alluding to the potential
for corn yields in some parts of the Midwest to be good.
Demand for corn, on the other hand, has diminished sharply
after prices hit an all-time high of $8.49 per bushel on August
10. U.S. livestock producers, particularly hog farmers, are
rushing to slaughter their animals due to record feed costs and
pasture damage from the drought.
"Corn numbers show we were rationing demand pretty
aggressively in the old crop," said Don Roose, president of U.S.
Commodities in West Des Moines, Iowa.
"Soybeans could not do a good job of rationing demand. If
you can't ration demand when prices are high, you can't ration
demand with lower prices," Roose said.
CBOT new-crop December corn fell 1.0 percent to close
at $7.69-1/2 a bushel. November soybeans rose 2.6 percent
to close at $17.45-3/4 a bushel after falling to a three-week
low on Tuesday. December wheat rose 0.7 percent to $8.90.
Wheat futures could get some price direction from a wheat
tender by Egypt's main state-run buyer, the General Authority
for Supply Commodities, that is due on Thursday.
It was the seventh tender in about a month by the world's
largest wheat importer that has been sent scrambling for
supplies amid drought cutting the Russian crop and dry weather
trimming the crop in Australia.
BUILDING RISK PREMIUMS IN SOYBEANS
With the soybean harvest at least five months away in
agricultural powerhouses Brazil and Argentina -- the world's
second and third largest exporters after the United States --
traders said America remains the sole supplier to the world.
Traders said risk premiums were being built into CBOT
soybean futures in case of any production problems in South
America, which was hit by a drought last year.
"Bottom line is soybeans have more fundamental support than
corn in today's trade," Commodity Trading Advisor Karl Setzer
of MaxYield Cooperative said in a note to clients.
"Hopes in South America are new crop soybeans will be
available for harvest by January. This could put them in the
global market by late February, about the same time the U.S.
inventory becomes depleted on exportable reserves," he said.
USDA's closely watched monthly supply-demand report
estimated this year's corn harvest at 10.727 billion bushels,
down slightly from last month's 10.779 billion estimate but
above the analysts' average estimate of 10.38 billion.
It would be the smallest crop in six years, with the lowest
yield in 17 years at 122.8 bushels per acre.
Analysts were surprised that the USDA did not cut its
estimate of corn's harvested acres for this year, which at 87.36
million was above trade expectations for 86.2 million.
A decline in harvested acres had been expected following
random field inspections that showed severe drought damage. Some
of the surveyed corn hardly had any kernels, making it worthless
"The harvested-acre number surprised me," said grain analyst
Ken Smithmier of The Hightower Report.
The USDA pegged the soybean harvest at 2.634 billion
bushels, down from last month's 2.692 billion and below the
analysts' average estimate of 2.657 billion. Ending stocks next
summer were projected to be the lowest in nine years at 115
million, unchanged from August's estimate.
"Clearly it was bullish beans and bearish corn," Charlie
Sernatinger of ABN AMRO in Chicago said about the report.
(Additional reporting by Julie Ingwersen; Editing by Keiron
Henderson, Maureen Bavdek, Lisa Von Ahn and Bob Burgdorfer)