U.S. corn futures fell 2.5 per cent for their largest decline in a month on Wednesday as the market was caught off guard when the government cut its production estimates less sharply than expected.
The U.S. Department of Agriculture’s monthly supply and demand report said farmers will harvest 14 billion bushels of corn. This would top the previous record by nearly a billion bushels and replenish global stockpiles diminished after last summer’s drought.
USDA reduced the estimate for corn production by less than one per cent, while analysts polled by Reuters were expecting a cut of more than two per cent.
The government decreased corn yield estimates, but left acreage unchanged and also lifted estimates for the U.S. winter wheat harvest, triggering selling that sent futures lower at the Chicago Board of Trade.
“The trade was trying to dial in a lot bigger overall production drop on corn than we actually ended up with. That is the highlight of the (negativity),” said Don Roose, an analyst at U.S. Commodities.
“World ending stocks went down mildly on corn and beans, but they were still very adequate for this year and next.”
CBOT December new-crop corn futures fell 13-1/4 cents to $5.37-1/2 per bushel, while July corn settled 8-3/4 lower cents at $6.50-3/4 (all figures US$).
CBOT July wheat declined 13-3/4 cents, or two per cent, to $6.83 per bushel, the lowest closing since May 21. Wheat deepened losses following the release of the crop report after coming under pressure early in the session from larger Australian production.
Australia is expected to raise wheat production 15 per cent this year to its fourth-largest crop on record, creating greater competition to U.S. supplies in global markets.
USDA estimated the soybean crop would also set a record at 3.39 billion bushels, slightly larger than the 2009 level.
“If you take the USDA report at face value, we’re going to have a 77-year high on corn planting. I don’t think a lot of people think that’s going to be the true number, but there is just enough there to weigh on the market,” said Brian Basting, an analyst at Advance Trading.
USDA left ending stocks of U.S. soybeans unchanged, with the razor-thin stockpile supporting futures.
CBOT July soybeans finished 1/4 cent lower at $15.40-3/4 per bushel after earlier rising as high as $15.58-3/4 — the highest level since early November. New-crop soybeans fell 12-3/4 cents to $13.14-1/4, pressured by expectations for a big U.S. harvest.
Rains this spring replenished soils with moisture that ran short during last summer’s drought, reducing corn and soy yields. Near-ideal growing conditions weighed on new-crop corn futures even as old-crop contracts held recent gains.
“There will be frequent storms for the next week to 10 days, bringing pretty much excellent conditions for crop development, but it will slow late plantings,” said Andy Karst, a meteorologist for World Weather Inc.
— Michael Hirtzer reports on agriculture commodities for Reuters from Chicago. Additional reporting for Reuters by Karl Plume and Sam Nelson in Chicago, Michael Hogan in Hamburg and Colin Packham in Sydney.