Corn leads grain markets lower, after surprise US yield upgrades


Soybean and, especially, corn futures tumbled, although wheat prices revived, after the US surprised traders by raising its yield forecasts for both row crops, while cutting hopes for values farmers can expect.

Soybean futures for November, which had stood only marginally lower ahead of the US Department of Agriculture estimate revisions, tumbled 2.3% in the aftermath, to $9.37 Ѕ a bushel.

The drop reflected an upgrade in the USDA's forecast for the domestic soybean yield this year of 0.5 bushels per acre to 49.9 bushels per acre, rather than the 0.6 bushels-per-acre downgrade that investors had expected.

'Rains aided crops'

The USDA, while noting "pockets of Midwestern dryness", which had left "some late-developing summer crops in need of rain", flagged that "in portions of the Dakotas and environs, August rain aided previously drought-stressed crops such as corn and soybeans".

Wasde 2017-18 soy data, change on previous, and (on market forecast)

US yield: 49.9 bushels per acre, +0.5 bpa, (+1.1 bpa)

US production: 4.431bn bushels, +50m bushels, (+103m bushels)

US carryout stocks: 475m bushels, no change, (+33m bushels)

World carryout stocks: 97.53m tonnes, -250,000 tonnes, (+140,000 tonnes)

Sources: USDA,, Reuters

The soy harvest upgrade left the US on course for a record 4.38bn-bushel harvest.

The USDA also raised estimates for US soybean exports, reflecting improved expectations for China's imports for both 2016-17 and 2017-18  - upgraded by 1.0m tonnes to 92.0m tonnes and 95.0m tonnes respectively.

However, the improved production hopes dashed investor expectations of a cut to the estimate for US soybean stocks, a particularly important pricing metric.

Hit to ethanol exports

Corn futures for December plunged more than 3% to within 1.25 cents of a contract low after the USDA issued a double boost to inventory hopes.

Wasde 2017-18 corn data, change on previous, and (on market forecast)

US yield: 169.9 bushels per acre, +0.4 bpa, (+1.7 bpa)

US production: 14.184bn bushels, +31m bushels, (+149m bushels)

US carryout stocks: 2.335bn bushels, +62m bushels, (+155m bushels)

World carryout stocks: 202.47m tonnes, +1.60m tonnes, (+1.73m tonnes)

Sources: USDA,, Reuters

Besides raising the yield forecast by 0.4 bushels per acre to 169.9 bushels per acre, the third largest on record, the USDA cut its estimate for consumption of US supplies, by 50m bushels.

The downgrade reflected in part a downgrade to expectations for use of the grain by ethanol plants, "based on observed usage during 2016-17 and expectations of lower exports" of the biofuel, following curbs on purchases by the likes of Brazil and China.

US corn stocks were seen ending 2017-18 at 2.34bn bushels – an upgrade of 62m bushels, rather than the 90m-bushel cut that investors had forecast.

'Lower prices'

"This month's 2017-18 US corn outlook is for increased production, greater feed and residual use, higher ending stocks, and lower prices," the USDA said.

Indeed, officials trimmed by $0.10 a bushel, to $2.80-3.60 a bushel, their forecast for the average price that farmers will receive in 2017-18.

Even at the mid-point, of $3.20 a bushel, that stands to be the weakest price in 11 years, with average values not slipping below $3.00 a bushel since 2005-06.

For soybeans, the price forecast was also trimmed by $0.10 at both ends of the range, to $8.35-10.05 a bushel.

At the mid-point, of $9.20 a bushel that implies farmers receiving the lowest price, bar one, of the past 10 years.

'Nominally supportive'

For wheat, the USDA left its forecast for domestic production and demand in 2017-18 unchanged, while cutting its estimate for world inventories by 1.55m tonnes to 263.1m tonnes, a bigger downgrade than investors had expected.

Wasde 2017-18 wheat data, change on previous, (on market forecast)

US carryout stocks: 933m bushels, no change, (+13m bushels)

World carryout stocks: 263.14m tonnes, -1.55m tonnes, (-1.16m tonnes)

Sources: USDA,, Reuters

While the estimate for the Russian harvest was lifted again, this time to a record 81.0m tonnes, the upgrade was offset in part by reduced figures for Australian and European Union production.

The cut to stocks hopes was deemed by Benson Quinn Commodities as "nominally supportive" to wheat futures, which recovered from early losses, on spillover selling from corn and soybean markets, to stand flat at $4.34 ѕ a bushel.


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