(Wall Street Journal) – Corn and soybean prices jumped Tuesday after government forecasters cut their estimate of last year’s U.S. harvests and pared their outlook for soybean supplies.
Corn and soybean futures both climbed about 1.5%, while wheat gained nearly 3%.
The U.S. Department of Agriculture, in a monthly report, said domestic corn production totaled 13.601 billion bushels, the third-biggest U.S. crop in history, on yields of 168.4 bushels an acre. Analysts had projected 13.647 billion bushels and yields of 169.2 bushels an acre.
Corn stockpiles at the end of the 2015-16 season in August will total 1.802 billion bushels, up from last month’s forecast of 1.785 billion bushels, the USDA projected.
Corn for March delivery advanced 5 cents, or 1.4%, to $3.56¾ a bushel at the Chicago Board of Trade.
The USDA’s final tallies for 2015 harvests provided some relief for beleaguered grain markets, which for months have languished due to several years of bumper crops and weak demand from overseas buyers.
Since reaching record heights during a withering 2012 U.S. drought, prices for corn and soybeans have fallen more than 50%, as growing world competition and a strong U.S. dollar slow export demand.
Tuesday’s tallies indicated U.S. crops last year weren’t quite as plentiful as expected, though still large on a historical scale.
Some analysts played down the market’s response to the report. Jim Gerlach, president of A/C Trading Co., a Fowler, Ind. commodities brokerage, said the gains mostly reflected traders with “short” positions—betting on lower prices—exiting those bets to take a profit or reduce risk. Such “short covering” helps buoy overall prices.
“If you squint really hard the [USDA] numbers are mostly, minorly supportive, but they’re not game-changers,” Mr. Gerlach said.
The government said farmers harvested a record 3.93 billion bushels of soybeans last year on yields of 48 bushels an acre. Analysts had expected the USDA to raise its output estimate to 3.983 billion bushels on yields of 48.4 bushels an acre.
In November, the government had estimated production at 3.981 billion bushels on yields of 48.3 bushels per acre.
Soybeans for March delivery, the most actively traded futures contract, rose 13¼ cents, or 1.5%, to $8.74½ a bushel at the CBOT. Lightly traded January soybean futures climbed 9¾ cents, or 1.1%, to $8.90¾ a bushel, the highest closing price for a front-month contract in about three weeks.
The government said U.S. soybean inventories at the end of the 2015-16 season will total 440 million bushels, below the 465 million estimated in December, and below analysts’ expectations of 471 million.
Export sales have been solid recently for U.S. soybeans, said Christian Mayer, analyst at agricultural-advisory firm Northstar Commodity Investment Co. “The soybean [supply outlook] coming down makes sense because the yield is down, but also because we’ve seen buyers come into the U.S. market in the form of export sales recently. The demand is still there for soybeans.”
Wheat prices rose to the highest level in more than three weeks, despite the USDA’s forecast for larger-than-expected stockpiles at the end of the season on May 31.
The USDA pegged domestic wheat reserves this spring at 941 million bushels, up from its December estimate of 911 million bushels. Analysts projected a forecast of 919 million bushels.
Smaller-than-expected estimates for winter-wheat acreage helped boost prices for the grain. The USDA in a separate report estimated that U.S. wheat farmers planted 36.7 million acres with winter varieties from September through November, down from 39.5 million planted the previous year.
CBOT March wheat futures rose 12¼ cents, or 2.6%, to $4.81¼ a bushel, the highest settlement price since Dec. 18.
