Corn and soybean prices fell to six-month lows after Informa Economics lifted its estimate for US harvests of both crops last year, signalling that supplies may not be as tight as the market had thought.
The analytics group lifted by 69m bushels to 3.040bn bushels its estimate for last year's soybean crop, taking it only 54m bushels from the 2011 harvest despite 2012 witnessing the worst US drought in more than 50 years.
Informa pegged the yield at 40.1 bushels per acre, 0.8 bushels per acre higher than previously thought.
For corn, the harvest estimate was raised by 75m bushels to 10.8bn bushels, reflecting an increase in yield of 1.0 bushels per acre, to 123.3 bushels per acre.
The data surprised investors who, according to broker RJ O'Brien, had been "leaning towards a modest decline in corn production" from the last estimate "and a slight gain in the soybean crop".
A survey by Farm Futures magazine released on Thursday showed the soybean crop at 2.969bn bushels.
The survey estimated the corn crop at 10.62bn bushels on a yield of 121.3 bushels per acre.
Signally, Informa not only carried a higher corn yield estimate, but made only a small downgrade, of 100,000 acres, to the number of corn acres which made it through to harvest, rather than being abandoned or cut for sileage.
Many commentators forecast that the US Department of Agriculture will cut the official estimate for the harvested acreage by a far higher figure.
During the last major drought, in 1988, 14% of corn failed to make it to harvest, compared with a current estimate of 9.5% for last year.
However, RJ O'Brien's Richard Feltes noted "mounting sentiment that the idea that the USDA is overstating 2012 harvested corn area may be flawed in view of the early harvest, the prompt filing of crop insurance claims and the ample time officials had to revise harvested area" before now.
Much-watched report ahead
Informa's report comes amid a spree of estimates ahead of the USDA's January Wasde report, on Friday, at which the department is expected to give final estimates for last year's domestic corn and soybean crops.
Informa matched its previous numbers to the USDA forecasts which are up for revision on Friday.
Chicago corn for March closed at $6.80 ¼ a bushel, down 1.3%, with an hour's trading to go, its lowest finish since early July last year.
The decline took the lot below its 200-day moving average, a key technical pointer, for the first time since June.
Chicago soybeans for March closed down 1.4% at $13.67 ¼ a bushel, earlier touching a six-month low of $13.56 a bushel.
Wheat futures were dragged lower too, despite a cut of 2m tonnes to 9.5m tonnes in Informa's estimate of the Argentine harvest, and ended down1.1% at $7.47 ¼ a bushel in Chicago, a six-month low.