U.S. grains: Corn falls after USDA raises yield estimate

Chicago | Reuters — Chicago corn futures fell 1.7 per cent on Tuesday, the biggest drop for a most-active contract in nearly a month, after the U.S. Department of Agriculture raised its 2017 corn yield forecast, bucking most trade expectations for a reduction.

Soybean futures fell after the USDA surprised analysts by hiking its U.S. soybean yield estimate as well.

Wheat futures closed higher, rallying from early declines and gaining against corn on inter-market spreads.

Chicago Board of Trade December corn settled down six cents at $3.51-1/2 per bushel after dipping to $3.45-1/2, its lowest since Aug. 31 (all figures US$).

CBOT November soybeans ended down 9-1/2 cents at $9.50-1/2 per bushel while December wheat rose 7-1/4 cents to $4.42 a bushel.

Corn fell after USDA in a monthly report raised its estimate of the average U.S. 2017 corn yield to 169.9 bu./ac. from its August estimate of 169.5 and above an average of analyst expectations for 168.2.

“Two months in a row, the government throws a bearish surprise at the trade. There’s nothing bullish about these numbers: yields are bigger than the trade thought,” said Don Roose, president of Iowa-based U.S. Commodities.

USDA raised its soybean yield estimate to 49.9 bu./ac., from 49.4 in August, topping a range of trade expectations.

“Soybeans got to enjoy some beneficial weather in the Corn Belt in August, and yield was increased as a result. This bump is not unexpected, but the 0.5 additional bu./ac. keeps the balance sheet’s ending stocks at 475 million bushels, even with greater export demand,” said Alex Norton, analyst at Beeson Inc.

The increases came in spite of dry conditions in portions of the Midwest crop belt.

“The U.S. yields show us just how resilient crops are these days to weather-related stress events. Technology has improved over the past five years,” said Terry Reilly, senior commodity analyst with Futures International.

CBOT wheat firmed on long wheat/short corn spreads, with the December wheat contract climbing to the day’s high late in the trading session.

Also supportive, USDA trimmed its world wheat ending stocks forecast for 2017-18 to 263.14 million tonnes, from 264.69 million in August.

— Julie Ingwersen is a commodities correspondent for Reuters in Chicago; additional reporting by Tom Polansek in Chicago, Michael Hogan in Hamburg and Naveen Thukral in Singapore.