U.S. grains: Corn, soy sink to new lows after bearish USDA report

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. corn and soybean futures fell to contract lows on Tuesday after the U.S. Department of Agriculture raised its 2015 harvest forecasts by more than expected and increased estimates for end-of-season stocks.

Wheat futures slumped for a third straight session and hit a two-week bottom on technical selling and on a bearish supply and demand outlook in a monthly USDA report.

USDA pegged 2015 U.S. soybean production at 3.981 billion bushels with an average yield at 48.3 bushels per acre, both all-time highs. The production increase more than offset higher expected use by processors and greater exports.

The corn harvest was seen at the third largest on record at 13.654 billion bushels on an average yield of 169.3 bushels per acre, the second highest ever. Meanwhile, USDA lowered its outlook for corn exports and use by ethanol makers, boosting ending stocks to a decade high.

Global stocks for both commodities were estimated at all-time highs. An unexpected revision to Chinese corn use over the past few years added to the grain glut.

“The market was surprised by the increase in production and decrease in demand,” said Rich Nelson, chief strategist with Allendale Inc.

“We certainly feel that demand change is more warranted, and from here we’ll be watching South American weather as well as changes in the U.S. dollar; the impact on commodities in general,” he said.

Chicago Board of Trade December corn posted a contract low of $3.56 and closed down 7-3/4 cents, or 2.1 per cent, at $3.59 a bushel, the lowest for a spot contract in two months (all figures US$).

January soybeans dropped 10-3/4 cents, or 1.2 per cent, to $8.55-1/2 a bushel after hitting a contract low of $8.50.

CBOT December wheat shed 11 cents, or 2.2 per cent, to $4.90-3/4 a bushel. Selling accelerated as the contract fell below its 50-day moving average.

Commodity funds sold an estimated net 20,000 corn, 9,000 soybean and 10,000 wheat contracts on the day, trade sources said.

Ample world supplies and weak export demand weighed on the wheat market.

USDA increased its forecast of U.S. 2015-16 ending stocks outlook by 50 million bushels to 911 million bushels, topping trade expectations for 877 million.

No U.S. wheat was offered in an overnight tender by Egypt’s state buyer GASC. The lowest offer in the tender, which closed on Tuesday, was for Ukrainian wheat, traders said.

Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Danny Na in Chicago, Nigel Hunt in London and Colin Packham in Sydney.

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