Update 1-U.S. Corn Crop Seen Bigger, Soybean Crop Lower Ahead of Acreage Resurvey -USDA

(CNBC) – The U.S. Department of Agriculture (USDA) increased its forecast of U.S. corn production and lowered its soybean harvest view by more than expected on Thursday, factoring in results from its widely questioned June acreage report.

Traders mostly shrugged off the updated U.S. harvest forecasts as the USDA has said that it will resurvey acreage in the coming weeks to fully account for the severe planting delays across the U.S. Midwest.

“The USDA has basically shown with this report that they are going to make us wait until the August 12 report to get some real numbers,” said Bob Utterback president of Utterback Marketing.

Chicago Board of Trade corn futures briefly slumped more than 2 percent after the report was released, but quickly rebounded into positive territory. Soybean futures were slightly higher, in line with where they were trading before the report.

Wheat futures rallied despite a boost to the U.S. production view as adverse weather overseas cut into harvest expectations for key exporters Canada, Australia, Russia and Ukraine.

“It amounted to a fairly sizable drop to world wheat production, which resulted in a tightening of stocks,” said Terry Reilly, senior analyst, Futures International. “The trade was caught off guard because they were so focused on corn and soybeans.”

The government said in its monthly supply and demand report that the 2019-20 U.S. corn harvest would total 13.875 billion bushels and the soybean harvest would total 3.845 billion bushels. Average yields were pegged at 166.0 bushels per acre (bpa) for corn and 48.5 bpa for soybeans.

In June, the USDA had pegged the corn harvest at 13.680 billion bushels and the soybean harvest at 4.150 billion bushels.

Analysts had expected the report to show a corn crop of 13.664 billion bushels, based on an average yield of 165.0 bpa and a soybean crop of 3.883 billion bushels, based on an average yield of 48.6 bpa, according to the average of estimates given in a Reuters poll.

USDA lowered its 2019-20 soybean ending stocks outlook to 795 million bushels from its previous estimate of 1.045 billion, with the supply decrease coming from its smaller harvest projection.

On the demand side, it reduced the U.S. soy export forecast by 75 million bushels to 1.875 billion bushels amid ongoing concerns about the ongoing trade dispute between the United States and China cutting into demand from the world’s top buyer of the oilseed.