(Reuters) – The United States is a month closer to bumper supplies of corn and soybeans, its major field crops, the U.S. Department of Agriculture said on Wednesday in a second look at the 2014/15 U.S. and world grain outlook.
Meanwhile, although the U.S. wheat crop is struggling, global supplies are on the rise. Following the report, Chicago wheat futures fell almost 2 percent to their lowest level since Feb. 28.
Corn prices sagged 1 percent to a four-month low on the outlook for ample supply, and soybeans, after initially ticking higher, also fell 1 percent.
“I didn’t see anything friendly in the reports. We are looking at huge world carryouts and with the current weather in the United States, there is no reason that the carryout can’t move significantly higher,” said Mark Gold, managing partner at Top Third Ag Marketing.
U.S. winter wheat production for 2014 will be down 10 percent from a year ago at 1.38 billion bushels, and was cut another 2 percent from May.
USDA lowered its hard red winter wheat crop estimate but raised its forecast for soft red winter wheat, the variety traded in Chicago. The SRW crop will still be down 20 percent on the year.
The all-wheat crop of 1.942 billion compares with a trade estimate of 1.964 billion and is down 9 percent on the year, hurt by poor conditions in the southern and central Plains and the Pacific Northwest.
“We have plenty of world wheat … When you’re the only one with significant production loss, it’s difficult to remain competitive in the world market,” said Shawn McCambridge, analyst at Jefferies Bache.
Global wheat supplies for 2014/15 were raised by 4.1 million tonnes, and projected ending stocks also rose. Crop estimates were raised for China, Russia, India and the EU.
“Russia going up 1 million tonnes on wheat production was a big surprise to me,” said Mark Zuzolo at Global Commodity Analytics.
SOYBEAN SUPPLY SQUEAKER
Domestic soybean stocks will dwindle to a roughly two-week supply ahead of a forecast record large crop and a spike in 2014/15 ending stocks.
USDA trimmed its 2013/14 soybean ending stocks forecast by 5 million bushels based on a higher crush. Record high imports will help U.S. soybean crushers limp through to harvest.
Forecasts for old- and new-crop corn ending stocks were unchanged on Wednesday at 1.146 billion bushels and 1.726 billion bushels respectively.
USDA will make its first survey-based production forecasts for corn and soybeans in August. Weekly updates show both crops in strong shape despite a late start to planting, suggesting high yields could be on the way.
“Conditions in the most recent crop progress report are the best in four years for the aggregated 18 reported states, and better than any time since 2007 for the Corn Belt,” USDA said.
World corn and coarse grain stocks are also on the rise. USDA increased its 2013/14 corn production estimates for Brazil and India.
“There’s certainly nothing here for the bulls to hang on to,” said Rich Feltes, vice president of commodity research at R. J. O’Brien.
