U.S. grains: Corn falls after higher yield estimate surprises traders

Chicago | Reuters — U.S. corn futures dropped to their lowest prices in more than a week on Thursday after the U.S. Agriculture Department surprised traders by raising its domestic yield estimate in a monthly crop report.

The losses dragged down soybean futures, which earlier approached a three-month high on lower-than-expected U.S. yield and ending stocks estimates in the report.

Analysts and traders have been uncertain about the size of the crops and skeptical of USDA’s previous estimates after historic rains and flooding caused severe planting delays across the U.S. Midwest this spring.

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“There’s way more corn than we thought there was going to be,” said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.

Most-active corn futures sank 3.6 per cent to $3.80-1/4 a bushel (all figures US$) at the Chicago Board of Trade (CBOT). The losses were a setback from a nearly two-month high reached on Wednesday.

CBOT soybeans closed down 0.1 per cent at $9.23-1/2 a bushel after reaching their highest price since July 15. CBOT wheat retreated 1.8 per cent to $4.93 after prices reached a two-month high on Wednesday.

USDA, in its monthly supply and demand (WASDE) report, pegged the U.S. corn yield at 168.4 bushels per acre, compared with 168.2 bushels in September. Analysts were expecting a cut to 167.5 bushels.

The agency reduced its soybean yield estimate to 46.9 bu./ac. from 47.9 last month. Analysts were expecting 47.3 bushels.

“The soybean-corn spreading was a given after USDA cut the soybean yield by a bushel and took the corn yield up a surprising 0.2 bushel,” said Terry Reilly, senior commodity analyst for Futures International.

USDA lowered its estimate for U.S. soybean ending stocks to 460 million bushels from 640 million last month. The trend toward tighter supplies helped support soy futures, Reilly said.

USDA, in a separate daily report for export sales, said China bought 398,000 tonnes of U.S. soybeans.

Traders are focused on China’s soybean demand as Washington and Beijing seek to resolve the bruising trade war that has slowed exports of U.S. farm products including soybeans. Top U.S. and China trade negotiators were set to meet on Thursday for the first time since late July to try to find a way out of the 15-month dispute.

“If we get a trade deal, we’re going to say, ‘Wow we’re going to run out of soybeans this year,'” said Ted Seifried, chief market strategist for Zaner Ag Hedge.

Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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