(AgriMoney) – Grain and oilseed prices jumped after US officials cut their forecast for domestic corn stocks and, while raising hopes for the soybean harvest, said that buyers would swallow up nearly all the extra supplies.
The US Department of Agriculture, in its much-watched Wasde crop report, downgraded its estimate for US corn inventories at the close of 2012-13 to 619m bushels, the lowest for 17 years, and a deeper reduction than investors had expected.
While the estimate for the harvest was trimmed by less than investors had expected, reflecting a unexpectedly low figure for crop abandonment to the worst drought since 1956, the USDA eschewed further cuts for forecasts for domestic consumption of the grain.
On soybeans, the USDA upgraded by some 226m bushels to its forecast for the US harvest, saying that sowings had exceeded previous expectations, and with yields turning out better than had been feared too.
However, while the raise to the harvest estimate beat market forecasts, so did USDA ideas for demand, which were seen sufficient to swallow all but 15m bushels of the extra output.
The immediate market reaction was to push up grain prices which had fallen into the report on expectations that the estimate revisions would show a larger easing in the squeeze in US corn and soybean supplies.
Chicago soybeans for November, up 0.7% ahead of the Wasde, extended gains to 2.9%.
Corn recouped small losses to post a gain of nearly 5%, helping wheat make 2.3% headway.