Chicago | Reuters –– U.S. soybean futures plunged six per cent and both corn and soybeans briefly fell their respective daily limits on Wednesday after the U.S. Department of Agriculture surprised traders by raising its estimates for domestic corn and soybean crops in a monthly report.
Analysts surveyed by Reuters had expected USDA to lower its yield and production forecasts for both crops following excessive rains in spring and early summer.
Instead, the government pegged the U.S. corn yield at 168.8 bushels per acre, up from 166.8 previously and the second highest on record, if realized. USDA projected the soybean yield at 46.9 bu./ac., up from 46 previously.
“A shocker, pure and simple; corn and bean yields were outside of the bell curve of expectations,” said Charlie Sernatinger, an analyst at ED+F Man Capital.
USDA raised its 2015-16 corn production forecast to 13.686 billion bushels, the third-largest on record if realized, and soybean production to 3.916 billion bushels, down one per cent from last year’s record harvest.
At the Chicago Board of Trade, new-crop November soybeans fell 61-1/2 cents to close at $9.10 per bushel after dipping to $9.01-1/2, down the contract’s daily 70-cent limit (all figures US$).
New-crop CBOT December corn ended down 19-1/2 cents at $3.68 a bushel after hitting $3.57-1/2, a life-of-contract low that was down the product’s 30-cent limit.
Wheat followed the weaker trend after USDA raised its projections for U.S. and world 2015/16 wheat ending stocks. CBOT September wheat fell 15 cents to $4.92-1/4 a bushel.
Soybeans came under pressure ahead of the USDA reports on news that China again allowed its currency to lose value, raising concerns about the buying power of the world’s top soy consumer.
The currency moves were only the latest challenge for U.S. soy exporters already facing their slowest sales pace in seven years as huge South American supplies and a strong dollar have been crimping demand for U.S. shipments for months.
Underscoring the trend, USDA on Wednesday lowered its U.S. soybean export forecast for 2015-16 by 50 million bushels.
“I don’t think that is the last reduction we are going to see there. The United States is not the player in the global soybean market that we used to be,” said Karl Setzer, market analyst at MaxYield Cooperative in Iowa.
— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Michael Hogan and Naveen Thukral.