Farm officials cut
their forecasts for the US corn and soybean crops even further than investors
had expected to account for damage from drought, lowering their estimates for
the corn yield to a 17-year low.
Corn prices, as
measured by Chicago's September contract, soared to $8.43 ¾ a bushel immediately
after the report, a record for a spot contract, before falling back to close in negative territory as
investors took profits on a rally of 6% in three trading sessions.
Crop prices as of Friday's close
Chicago soybeans, (November contract): $16.43 ¾ per bushel, +0.5%
London wheat, (November): £196.00 per tonne, -0.4%
Paris wheat, (November): E264.00 per tonne, -0.6%
Chicago corn (December): $8.09 ¼ per bushel, -1.4%
Kansas wheat (September): $8.93 per bushel, -2.4%
Chicago wheat, (September): $8.85 ¼ per bushel, -2.9%
The US Department
of Agriculture cut its estimates for the domestic corn yield from 146.0 bushels
per acre to 123.4 bushels per acre, which would be the worst result since 1995.
The estimate for
acres abandoned because of the worst drought in more than 50 years, capped by
the hottest July on record, was raised by 1.5m acres to 9.0m acres, to leave
production at a little under 10.8bn bushels.
"Extreme heat and
dryness continued, and in many areas worsened, during July across the Plains
and Corn Belt," the USDA said.
"Most notably, much of the Corn Belt recorded temperatures more than
6 degrees above normal while receiving precipitation totaling less than 50% of
|Wasde corn data 2012-13, change on last and on (market forecast)|
Harvested area: 87.4m acres, -1.5m acres, (+1.0m acres)
Yield: 123.4 bushels per acre, -22.6 bushels per acre, (-3.9 bushels per acre)
Production: 10.779bn bushels, -2.19bn bushels, (-247m bushels)
The harvest figure
represented a 2.2bn-bushel downgrade from the USDA's July estimate, and was
lower than the market had expected.
Indeed, the USDA
left the door open for further corn price rises, lifting its forecast for
farmgate prices "sharply" to a record $7.50-8.90 per bushel.
For soybeans, the
yield estimate was cut to 36.1 bushels per acre from 40.5 bushels per acre.
With the forecast
for sowings making it to harvest also reduced, production was pegged at 2.69bn
bushels, 350m bushels lower than the USDA had previously expected, and also a
bigger downgrade that the market had forecast.
|Wasde soy data 2012-13, change on last and on (market forecast)|
Harvested area: 74.6m acres, -0.7m acres, (-0.2m acres)
Yield: 36.1 bushels per acre, -4.4 bushels per acre, (-1.7 bushels per acre)
Production: 2.692bn bushels, -358m bushels, (-125m bushels)
November soybean contract also rise strongly after the data, hitting $16.59 ¾
a bushel, before giving up some gains.
The USDA raised its estimate for farmgate soybean prices by
$2.00 per bushel to $15.00-17.00 per bushel.
futures closed firmly lower after the USDA cut its forecasts for world production by only
2.5m tonnes, less than many analysts had expected.
downgraded its estimates for the Russian harvest to 43.0m tonnes, only 1.5m
tonnes above the 2010 level which prompted Moscow to impose a grain export ban,
and for the crop in neighbouring Kazakhstan to 11.0m tonnes.
"Production is lowered
6.0m tonnes for Russia on reduced area and yield prospects due to July
heat and dryness across most of the spring wheat growing areas," the USDA said
in its benchmark Wasde crop report.
"Spring wheat in
adjoining areas of Kazakhstan was also affected by the same adverse weather
reducing production prospects 2.0m tonnes."
for Indian and Ukraine crops were upgraded. Signally, the USDA also left its
estimate for the Chinese harvest unchanged at 118.0m tonnes, despite reports
from its Beijing office of hefty disease damage.