(Wall Street Journal) – Corn prices jumped to a one-year high after federal forecasters trimmed their estimate of this year’s U.S. harvest and lowered their outlook for near-term supplies of the grain.
Soybean prices also rose, buoyed by lower-than-expected forecasts for domestic stockpiles, while wheat prices were mixed.
In a monthly crop report Friday, the U.S. Department of Agriculture said it expects farmers to produce 13.53 billion bushels of corn this autumn, down from its June outlook for 13.63 billion. The cut reflects the USDA’s estimate late last month that farmers planted less corn acreage this spring than it had previously expected. The latest harvest forecast, however, was higher than the 13.395 billion bushels projected by analysts surveyed by The Wall Street Journal.
The USDA projected corn yields of 166.8 bushels an acre, unchanged from its previous estimate. Analysts widely expected the USDA to lower its yield forecast to about 165 bushels an acre because of wet weather this growing season that has flooded fields in parts of the eastern Midwest, draining nutrients from the soil and potentially hurting crops.
“Anyone that’s driven through the country at all this spring or summer has seen that there are problems with this crop,” said Doug Bergman, analyst with investment firm RCM Asset Management in Chicago. “People are pretty confident in their beliefs that yields are headed lower” in future reports for both corn and soybeans.
Still, analysts cautioned that while adverse weather in the eastern Corn Belt may lower yields there, growing conditions elsewhere have been close to ideal, aiding crop development and potentially resulting in record yields further west.
Corn futures got a big boost from a tighter near-term supply outlook. The USDA projected U.S. inventories on Aug. 31 at 1.779 billion bushels, down significantly from its June estimate for 1.876 billion, and lower than the average analyst estimate of 1.809 billion bushels. The reduced stockpile figure for the current season represents increased corn exports and greater usage by livestock producers, the government report said.
Corn futures for July delivery rose 6 cents, or 1.4%, to $4.27 1/4 a bushel on the Chicago Board of Trade, the highest settlement price for a front-month contract since June 2014.
Most-actively traded December futures added 6 cents, or 1.4%, to $4.45 a bushel.
Soybean futures rose to a one-week high as the government forecast larger-than-expected production this year but projected lower-than-expected stockpiles for the current season.
The USDA said soybean output will total 3.885 billion bushels this autumn, up from 3.85 billion in its June outlook. Analysts had expected the agency to project production at 3.794 billion bushels.
The government also maintained its month-ago projection for soybean yields of 46 bushels an acre. Analysts had expected the USDA to lower its yield forecast to about 45 bushels an acre, and many anticipate it will cut estimates for both production and yields in subsequent crop reports, as persistent rains this summer are preventing some growers from finishing soybean planting and leaving standing water in some Midwestern fields.
The USDA said domestic soybean inventories will total 255 million bushels at the end of August, compared with a June estimate for 330 million and well below analyst projections of 292 million. The government raised its projections for soybean exports and processing this season by 15 million bushels each.
July soybeans advanced 5 3/4 cents, or 0.6%, to $10.43 1/2 a bushel in Chicago trading. Most-actively traded November futures climbed 6 3/4 cents, or 0.6%, to $10.22 1/4 a bushel.
Wheat futures settled mostly lower after the government predicted higher U.S. production and raised inventory estimates from month-ago levels.
Federal forecasters pegged U.S. wheat output at 2.148 billion bushels in the season that started June 1, roughly in line with analyst estimates.
Domestic wheat stockpiles at the end of the 2015-16 season will total 842 million bushels, higher than the government’s June estimate for 814 million. Analysts had expected 855 million bushels.
The USDA also projected larger-than-expected forecasts for global stockpiles of the grain.
“At the end of the day we’re still swimming in wheat,” said Joel Karlin, a market analyst with grain miller Western Milling in Goshen, Calif.
CBOT July wheat futures rose 9 1/4 cents, or 1.6%, to $5.81 1/2 a bushel in Chicago trading. Most-active September futures slid 2 cents, or 0.4%, to $5.76 a bushel.
