Chicago corn plunges as record-large U.S. harvest looms

U.S. corn futures slid more than three per cent on Tuesday, surrendering all of the prior day’s gains as investors shifted their focus from Monday’s low U.S. government corn yield estimate to its forecast for a record-large harvest and plentiful stockpile next season.

New-crop December corn fell to a near-three-year low as technical selling propelled the contract’s steep break in more than six weeks and its seventh decline in nine sessions.

Autumn-harvest soybeans extended the previous day’s gains on continued support from the U.S. Agriculture Department reduction in its U.S. soy crop forecast, but the advance was limited by a slightly wetter Midwest weather forecast and spillover pressure from corn.

“There’s a prevailing thought that USDA’s (corn) production number is probably understated. They had less data to work with this year than in the past because of the delayed development so they had to use some historical assumptions,” said Shawn McCambridge, analyst with Jefferies Bache.

“The reality is that we have the largest crop in history and an almost 1.9-billion-bushel carryout isn’t exactly tight.”

USDA on Monday cut its forecast for corn yields to 154.4 bushels per acre from its July estimate of 156.5 bushels, but numerous analysts said the yield would likely be raised when the forecast is updated next month.

The immaturity of this season’s corn crop meant that USDA was unable to weigh many of the ears they were counting so they used a derived weight.

USDA estimated the U.S. soybean yield at 42.6 bushels per acre, down from 44.5 bushels, but analysts stressed that weather over the coming weeks could shift that figure considerably in
either direction.

Focus on weather

Warmer weather forecast for the Midwest next week should help accelerate crop development. Spotty rains were a concern, but an updated forecast at midday suggested that western Iowa, one of the driest areas of the corn belt this summer, may receive beneficial rains in the coming days.

“The North American weather model has a big area of about two inches of rain in Iowa by the weekend and that’s definitely an increase from what we saw 24 hours ago. The GFS model is still staying dry, but it brings in more question about being a long position holder in beans,” said Mike Zuzolo, president of Global Commodity Analytics.

Chicago Board of Trade December corn futures dropped 16-3/4 cents, or 3.6 per cent, to $4.47-1/4 a bushel (all figures US$). It was the steepest decline since a larger-than-expected USDA acreage estimate sent new-crop futures down five per cent on June 28.

CBOT November soybeans gained 2-1/2 cents to settle at $12.27-3/4 per bushel after earlier hitting a 2-1/2 week peak of $12.35. August soybeans fell 14 cents to $13.59-3/4 as traders rolled out of the contract and into deferred months ahead of its expiration on Wednesday.

CBOT September wheat eased with sinking corn, shedding 6-3/4 cents, or 1.1 per cent, to $6.28-1/4 a bushel.

Commodity funds sold a net 12,000 corn contracts and 3,000 wheat contracts on the day, but were net even in soybeans, trade sources estimated.

— Karl Plume reports for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen and Sam Nelson.

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