Chicago | Reuters — Chicago Board of Trade soybean futures on Friday rallied to their highest since June 2018 as traders projected an increase in the U.S. Department of Agriculture forecast for exports with a further cut in domestic production.
Corn futures reached a six-month high, while wheat futures fell to a two-week low.
USDA, in a monthly report, said U.S. corn and soybean production will be smaller than previously expected because of unfavourable weather last month. Traders expect inventory estimates may tighten due to even lower harvest forecasts and higher exports.
USDA left its estimate for soybean exports unchanged from August, despite robust demand from China. The agency, through a daily reporting system, has announced sales to the world’s top soybean importer for six consecutive trading sessions.
China, seeking to combat food security risks, has also been a big buyer of U.S. corn. The USDA kept its estimate for China’s corn imports unchanged from last month.
“The trade believes that the yields are going to continue to fall,” said Don Roose, president of Iowa-based broker U.S. Commodities. “And you still have a buyer underneath the market: China.”
The most-active soybean contract ended 18-1/2 cents higher at $9.96 a bushel, after rising to $9.98, the latest in a series of highs since June 2018 (all figures US$).
CBOT corn rose 3-1/2 cents to $3.68-1/2 a bushel after reaching its highest price since March 13 at $3.69-1/4. CBOT wheat bucked the trend and fell 6-1/4 cents to $5.42.
USDA lowered its estimate of 2020-21 U.S. ending stocks by 150 million bushels to 460 million bushels for soybeans and by 253 million bushels to 2.503 billion bushels for corn.
“There’s a lot of people looking at that 460 carryout, thinking, ‘It’s not 460. It’s 400 or less, because the export number has to come up,'” said Joe Vaclavik, president of Standard Grain brokerage.
— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Gus Trompiz in Paris, Naveen Thukral in Singapore and Karl Plume and Christopher Walljasper in Chicago.