Corn futures hit seven-year low, on record US yields

15.08.2016

Corn futures hit a 7-year low, after the US government unveiled a heft upgrade to yield expectations for the upcoming US harvest.

But soybean markets showed more composure, despite similarly hefty yield expectations, thanks to a smaller old crop carry-in following rapid export sales.

The US Department of Agriculture forecast record US soybean and corn crops, as it boosted its forecast for the coming harvest above analyst expectations.

Wasde 2016-17 corn data,  previous forecast (and trade forecast)

US harvest, in bushels: 15.153bn, 14.54bn, (14.76bn)

US carryout stocks in bushels: 2.41bn, 2.08bn, (2.26bn)

World carryout stocks in tonnes: 220.8m, 208.39m, (212.7m)

Sources: USDA, Agrimoney.com, CHS Hedging

"It was quite the report," said Benson Quinn Commodities.

"Basically this is one of the most bearish crop production estimates for the US we have seen in a while for a USDA August report," said Terry Reilly, at Futures International.

Record corn yields

The USDA forecast US corn production at a massive at 15.15bn bushels, and increase of some 600,000m bushels from last month's forecast.

This was about 400,000 tonnes more than the average of analyst expectations.

The USDA forecast average yields of 175.1 bushels an acre.

"Nearly all Corn Belt states, with the exception of Minnesota and South Dakota, are forecast to have yields above a year ago," the USDA said.

The USDA forecast corn yields in Illinois the second-largest US producer, at 197 bushels an acre, up 25 bushel an acre from last year.

Corn hits 7-year low

Wasde 2016-17 wheat data, previous forecast (and trade forecast)

US harvest in bushels: 2.32bn, 2.26bn, (2.27bn)

US carryout stocks in bushels: 1.10bn, 1.11bn, (1.11bn)

World carryout stocks in tonnes: 252.8m, 253.70m, (251.63m)

Sources: USDA, Agrimoney.com, CHS Hedging

Ideas of US corn consumption and exports were lifted, but not enough to outweigh the heavy stocks, as well as a boost to 2015-16 ending stocks.

As a result, corn ending stocks for 2016-17 were boosted to 2.409bn bushels from 2.081bn.

And ideas for 2016-17 world corn ending stocks were lifted by some 12.4m tonnes, to 220.80m tonnes, about 8m tonnes above analyst expectations.

Corn was trading at 3.24 Ѕ in midday deals,, down some 5 cents from pre-report levels, and down 2.2% on the day and a near seven-year low.

Soybean markets tick up, down, and then flat

And the soybean crop was seen at 4.06bn bushels, more than 100,000 bushels more than the July forecast, topping analyst's expectations of 3.94bn bushel.

Yields were seen at 48.9 bushels per acre.                                                

But soybean futures actually spiked higher immediately after the report, thanks to the tighter than expected old crop stocks number.

As Mr Reilly said, the market "seems to have already worked in the large production figures".

Wasde 2016-17 soy data, previous forecast (and trade forecast)

US harvest in bushels: 4.060bn, 3.88bn, (3.94bn)

US carryout stocks in bushels: 330m, 290m, (316m)

World carryout stocks in tonnes: 71.2m, 67.1m, (67.6)

Sources: USDA, Agrimoney.com, CHS Hedging

Exports get a boost

As expected, US soybean exports got revised upward, after recent heavy sales, with 85m bushels added to the figure for 2015-16, and further increases for next season.

The USDA said that "unusually large outstanding old-crop sales are confirmed by the latest shipment data".

But despite this, and heavier crushing, soybean ending stocks for 20161-7 were seen at 330m bushels, up 40m bushels from last month and some 24m bushels above analyst expectations.

World soybean ending stocks for 2016-17 were seen at 71.24m tonnes.

November soybean futures were down 1.3% on the day, at $9.73 a bushel, a touch below pre-report levels, after initially spiking higher on the cut to 2015-16 ending stocks.


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