Chicago | Reuters — Chicago corn futures fell nearly six per cent on Monday, their biggest drop in more than three years, after the U.S. Department of Agriculture forecast a bigger-than-expected harvest.
USDA forecast the 2019-20 corn crop at 13.901 billion bushels, above the 13.875 billion bushels expected in July. A Reuters poll of analysts had predicted a USDA forecast of 13.193 billion bushels.
USDA resurveyed farmers following wide criticism of a June report on how many acres of corn would be planted. Its new survey showed farmers had planted 90 million acres, well above the 80.05 million acres in the June poll.
“Traders didn’t get to see corn acres cut as much as they wanted so they’re sending futures markets sharply lower,” said Terry Reilly, senior commodity analyst, Futures International. “The crop isn’t as bad as people predicted out there.”
Chicago Board of Trade most-active corn closed at to $3.92-3/4 cents (all figures US$). Five corn futures contracts fell to their daily limit down of 25 cents, the second time in seven weeks.
Soybeans settled down 12-1/2 cents, or 1.5 per cent, to $8.70-1/4 a bushel, while wheat closed down 27-3/4 cents. or 5.4 per cent, to $4.71-3/4 a bushel.
“These numbers could not have been worse for the corn, and the corn is the locomotive that pulls the grain train,” said Charlie Sernatinger, analyst with ED+F Man Capital.
Wheat markets are also facing good world supplies and heavy export competition.
Wheat harvesting in Europe is generally progressing well, with work in France almost finished.
USDA lowered its soybean crop estimate to 3.68 billion bushels from 3.845 billion bushels previously.
While rain disrupted corn planting this year, dry weather in recent weeks has caused concern about lack of water hindering crop development.
Some analysts said USDA’s corn numbers were still suspect, particularly the projected yield of 169.5 bushels per acre.
“The USDA is telling us this average, and you have to trade with the numbers you’re given, but let’s be realistic, these numbers are off,” said J. Mark Kinoff, president of Ceres Hedge.
USDA also released its weekly crop report. Corn and soybeans saw no change in their good-to-excellent rating, at 57 and 54 per cent, respectively. Spring wheat experienced a significant drop, with the good-to-excellent rating being 69 per cent, down from 73 per cent a week earlier.
— Reporting for Reuters by Barbara Smith; additional reporting by Julie Ingwersen, Tom Polansek and Karl Plume in Chicago and Michael Hogan in Hamburg; writing by Caroline Stauffer.