U.S. grains: Corn nears one-month low after USDA raises harvest estimate

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Chicago/Reuters – U.S. corn futures slid on Wednesday to their lowest level in almost a month and soybean futures weakened after the U.S. Department of Agriculture raised its domestic harvest estimates from already record-high levels.

In a monthly report, the USDA said farmers will grow 15.226 billion bushels of corn this year, with an average yield of 175.3 bushels an acre. That was up from its October forecast for 15.057 billion bushels and an average yield of 173.4 bushels an acre.

The increase surprised analysts, who on average had expected corn production of just 15.041 billion bushels, with a yield of 173.2 bushels per acre, according to a Reuters survey. The USDA’s latest yield and production estimates matched the high end of the range of analysts’ forecasts in the survey.

“Where are we going to go with all this grain?” said Mark Gold, managing partner for Top Third Ag Marketing in Chicago.

The Chicago Board of Trade’s most-active corn contract was down 11-1/2 cents at $3.42-3/4 a bushel by 11:50 a.m. CST (1750 GMT).  The contract traded as low as $3.42, its lowest price since Oct. 13.

Most-active soybeans sank 23-1/4 cents to $9.88 a bushel, while wheat lost 5-1/2 cents to $4.09-3/4 a bushel.

The USDA estimated the soybean crop at 4.361 billion bushels, up 92 million bushels from its October outlook.

The government raised its soybean yield estimate to 52.5 bushels per acre from 51.4 bushels. The USDA also unexpectedly raised its 2016-17 corn ending stocks outlook to 2.403 billion bushels, which would be the fifth biggest ever, from 2.320 billion.

The agency increased its soybean ending stocks forecast to 480 million bushels, 60 million bushels higher than the average of analysts’ estimates and up from its October estimate of 395 million bushels. If realized, soybean ending stocks would be the third highest on record.

“It’s just a heavy, bearish report,” said Joe Lardy, analyst at CHS Inc.

Terry Reilly, senior commodity analyst for Futures International in Chicago, said the decline in corn and soybean futures was warranted after the data were released.

“We could probably go a little lower in both of those markets,” he said.

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