Corn futures slumped after the U.S. Department of Agriculture delivered a production forecast that was bigger than analysts expected as crops have been able to do relatively well despite a delayed growing season.
Record spring flooding led to a historically delayed planting season in the Midwest. The late start meant many analysts and traders have been expecting a negative impact for yields. But crops have proved to be resilient, partly thanks to better weather as the growing season progressed.
The USDA has consistently delivered a rosier outlook for supplies than the market predicted, sparking a slump for prices.
Still, harvesting is behind normal stages for many farmers. That means crops are vulnerable to bouts of cold, especially with snow forecast for swaths of the U.S. Plains and Midwest this week that could end up stifling yields.
“The market once again is stymied by a larger than expected area and a higher than expected yield for corn,” said Michael McDougall, a broker at Paragon Global Markets in New York. “What’s next? The storm won’t have any ill affects?”
Corn production will total 13.779 billion bushels, the agency said Oct. 10 in its monthly World Agricultural Supply and Demand Estimates report. Analysts surveyed by Bloomberg had forecast 13.588 billion on average. Futures extended declines after the report’s release.
Soybean futures moved in the opposite direction, gaining in Chicago after the USDA lowered its production estimate for the oilseed to 3.55 billion bushels, trailing the average analyst estimate.
While corn’s getting a shock from bearish supply numbers, weaker demand looks to be the culprit for the boost in wheat stockpiles. The USDA cut its outlook for global feed use and imports from September, and the agency is growing more optimistic on the outlook for EU wheat exports. Wheat futures sank.