U.S. Grain Futures Tumble on Upbeat Outlook for Crops

(Wall Street Journal) – U.S. grain and soybean futures closed sharply lower Wednesday—with corn sinking to the lowest level in more than four years—after government and private-sector reports reinforced expectations for massive harvests ahead.

Corn futures for September delivery fell 4.1%, the biggest decline on a percentage basis since June 30, pressured by reports from Allendale Inc. and Lanworth estimating high yields that may translate to larger U.S. grain stockpiles, analysts said.

September corn dropped 14½ cents to $3.41¼ a bushel on the Chicago Board of Trade, marking the lowest closing price since June 29, 2010. December corn futures, the most-active contract by volume, dropped 11¾ cents, or 3.2%, to $3.52 a bushel.

Corn prices also were weighed down by a crop-progress report by the U.S. Agriculture Department on Tuesday afternoon that showed 74% of U.S. corn was in good or excellent condition as of Sunday, up from 73% seven days earlier and only 59% a year ago.

Firms’ estimates of coming crop yields, which also included a report late Tuesday from commodity brokerage INTL FCStone, verbalized months-long anticipation among traders and analysts that this year’s haul of corn and soybeans could set an all-time record, said Dan Dempsey, commodity analyst at EHedger, a brokerage firm based in Clarendon Hills, Ill.

“The proof is in the pudding,” Mr. Dempsey said. “You are starting to see it in southern [U.S.] corn yields and southern bean yields.”

Soybean and wheat futures also declined Wednesday as crop-yield forecasts soothed concerns over weather-related threats to some U.S. soybean fields, and a strengthening U.S. dollar added uncertainty to export prospects for the domestic wheat crop.

Fund managers speculating on soybean prices have shied away from bidding contracts higher following the USDA report on crop conditions and the private estimates on yields released so far this week, according to Mike Zuzolo, president of Global Commodity Analytics & Consulting, based in Atchison, Kan.

“That completely defused the soybean potential buyer from coming into the market,” Mr. Zuzolo said.

Soybeans for September delivery on the CBOT declined 16½ cents, or 1.5%, to close at $10.80¾ a bushel. Most-active November soybeans shed 12 cents, or 1.2%, to $10.20 a bushel.

September-dated wheat contracts fell 20 cents, or 3.7%, to settle at $5.23½ a bushel in Chicago trading. Most-active CBOT December wheat declined 19¼ cents, or 3.5%, to $5.35¾ a bushel.

Wheat fell partly due to continued strength in the U.S. dollar, which traders see making domestic wheat less competitive on the world market, Mr. Zuzolo said. The WSJ Dollar Index, which measures the dollar’s exchange rate against seven of the world’s most actively traded currencies, has climbed about 3.4% over the past two months.