U.S. grains: Markets hit four-year lows as USDA lifts record crop forecasts

(Lisa Guenther photo)

Chicago | Reuters –– U.S. corn and soybean futures tumbled to four-year lows on Thursday as the U.S. government raised its forecasts for record-large harvests above analysts’ estimates.

Projections for the biggest global grain crop ever added pressure to prices, knocking nearby wheat futures below $5 a bushel for the first time since 2010 (all figures US$).

Traders predict the U.S. Department of Agriculture will increase its estimates for U.S. crop production again next month due to favourable weather in the Farm Belt, setting the stage for further declines in prices. The corn and soy harvests are in their beginning stages in the U.S., the world’s top grains producer.

“Big crops will get bigger and this is, at the moment, probably underestimated,” said Mark Gold, managing partner of Top Third Ag Marketing, about USDA’s projections.

Chicago Board of Trade December corn futures ended down 1.4 per cent at $3.41 a bushel after setting a contract low of $3.35-3/4 a bushel earlier in the session.

September corn touched a session low of $3.29 a bushel, the lowest for a front-month contract since 2010. The nearby contract has lost more than 20 per cent this year on expectations that inventories will swell due to the massive autumn harvest.

CBOT November soybeans fell 1.2 per cent at $9.81-1/2 a bushel after earlier reaching a contract low of $9.69-1/2. September soybeans touched a four-year low for a front-month contract of $10.45.

USDA, in a monthly crop report, projected the average U.S. corn yield at 171.7 bushels an acre, above its August estimate of 167.4 bushels, and the soy yield at 46.6 bu./ac., up from 45.4 bushels last month.

Analysts had expected a corn yield of 170.7 bushels and a soy yield of 46.3 bushels, according to a Reuters poll.

USDA’s increased estimate for soybean yields at the beginning of harvest was “confirmation of what they’re seeing out there in the field,” said Arlan Suderman, analyst for Water Street Solutions.

“The reported yields are just coming in huge.”

CBOT December wheat ended down two per cent to $5.09-1/2 a bushel after earlier setting a contract low of $5.03. September wheat dropped to a session low of $4.99-1/2 a bushel, the lowest price for a front-month contract since 2010.

USDA raised its outlook for global wheat production by 3.9 million tons from August to a record 720 million.

“We are swamped with grain stocks not only in the U.S. but in the world,” said Don Roose, president of brokerage U.S. Commodities in Iowa.

Commodity funds sold an estimated 9,000 soybean contracts, 8,000 corn contracts and 5,000 wheat contracts.

— Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Naveen Thukral in Singapore.

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