Corn and winter wheat futures led grains lower, undermining
resilience in soybean and spring wheat prices, after US officials, in long-awaited
crop data, held with their corn yield forecast despite dryness in parts of the
Futures closing prices on Wednesday
Soybeans, (November): $10.34 a bushel, -0.8%
Minneapolis hard red winter wheat, (September): $7.82 ¾ a bushel, -1.8%
Chicago soft red winter wheat, (September): $5.37 a bushel, -2.9%
Corn, (December): $3.98 ¾ a bushel, -3.7%
Corn futures for December plunged 3.9% at one point, falling
below $4 a bushel, after the US Department of Agriculture, in its much-watched
Wasde briefing, confounded expectations of most investors by sticking by
estimates for a strong US yield this year, of 170.7 bushels per acre, despite deteriorating
The USDA acknowledged that "during June, harvested-area
weighted precipitation for the major corn producing states was below normal".
However, the rainfall shortfall "did not represent an
extreme deviation from average", the department said, pegging US corn stocks at
the close of 2017-18 at 2.325bn bushels – an upgrade of 215m bushels from last
month, and well above market expectations too.
Winter vs spring
Winter wheat futures, meanwhile, for September tumbled by
3.2% in Chicago in initial deals after the Wasde pegged US winter wheat
production at 1.32bn bushels, some 70m bushels above investor forecasts.
Wasde corn data, change on previous and (on market forecast)
US yield: 170.7 bushels per acre, unchanged, (+1.1bpa)
US production: 14.255bn bushels, +190m bushels, (+129m bushels)
US stocks, close of 2016-17: 2.370bn bushels, +75m bushels, (+49m bushels)
US stocks, close of 2017-18: 2.325bn bushels, +215m bushels, (144m bushels)
World stocks, close of 2016-17: 227.51m tonnes, +2.94m tonnes, (+1.79m tonnes)
World stocks, close of 2017-18: 200.81m tonnes, +6.48m tonnes, (5.48m tonnes)
Sources: USDA, Reuters
The USDA flagged "both higher harvested acreage and yield".
Eventually, the weakness weighed on Minneapolis-traded
spring wheat too, snuffing out a recovery which had seen the September contract
return to positive territory, after the USDA pegged the US other spring
wheat harvest at 423m bushels, in line with market expectations.
The durum crop estimate, at 57m bushels, was 21m bushels
beneath market hopes.
"The production forecasts for durum and other spring wheat
indicated a significant decline compared to last year for these two classes
primarily due to severe drought conditions affecting the northern US Plains,"
the department said.
Soybean futures also showed early resilience, with some
disappointment that the USDA did not reduce its estimate for this year's
domestic yield offset somewhat by the boost to sentiment from an export upgrade
which cut the forecast for season-end stocks below broker expectations.
Wasde soybean data, change on previous and (on market forecast)
US yield: 48.0 bushels per acre, unchanged, (+0.1bpa)
US production: 4.260bn bushels, +5m bushels, (+17m bushels)
US stocks, close of 2016-17: 410m bushels, -40m bushels, (-20m bushels)
US stocks, close of 2017-18: 460m bushels, -35m bushels, (-13m bushels)
World stocks, close of 2016-17: 94.78m tonnes, +1.57m tonnes, (+1.66m tonnes)
World stocks, close of 2017-18: 93.53m tonnes, +1.31m tonnes, (+1.39m tonnes)
Sources: USDA, Reuters
"Soybean exports for 2016-17 are projected at 2.10bn
bushels, up 50m, reflecting shipments and outstanding sales through early July,"
the USDA said, while trimming its estimate of the season's US soybean crush on "lower
projected soymeal exports and domestic use".
Still, the forecast for world soybean inventories at the
close of 2017-18, at 93.53m tonnes, was 1.4m tonnes ahead of market
expectations, reflecting a boost to the Chinese stocks estimate from raised
ideas on the country's own production, and imports.
"Soybean production is raised for China due to increased
The data were termed by Terry Reilly at Chicago broker
Futures International as "overall bearish".
Wasde wheat data, change on previous and (on market forecast)
US production: 1.760bn bushels, -64m bushels, (+12m bushels)
Includes other spring wheat: 423m bushels, n/a, -+7m bushels
US stocks, close of 2017-18: 938m bushels, +14m bushels, (62m bushels)
World stocks, close of 2016-17: 258.05m tonnes, +1.62m tonnes, (+2.70m tonnes)
World stocks, close of 2017-18: 260.60m tonnes, -590,000 tonnes, (3.24m tonnes)
Sources: USDA, Reuters
"USDA did not revise the soybean and corn yields, which
ruffled up the trade average, versus actual, for US corn and soybean
production, leaving ending stocks for 2017-18 looking inflated, at least for
corn," Mr Reilly said.
At Global Commodity Analytics, Mike Zuzolo said: "The trade
is likely going to feel even more comfortable being long soybeans/short corn
until more is known about the [US] weather."