Corn futures dive to contract low, after US ups yield estimate to record high
Corn futures tumbled to a contract low after the US surprised investors by upgrading its estimate for this year’s domestic corn yield to record high, putting stocks on course for a 30-year high.Latest Report:
Corn futures for December, which had stood little changed ahead of the US Department of Agriculture estimates, tumbled to $3.42 a bushel in the aftermath, a drop of 1.8% on the day, and a low for the contract.
The slide followed the upgrade by the USDA, in its key month Wasde crop report, to estimates for US corn supplies, with stocks now seen ending 2017-18 at 2.49bn bushels (63.2m tonnes), their highest since 1987-88.
The revision was far larger than expected by investors, with some data on soybean and wheat supplies beating expectations too.
“All-in-all a bearish report,” said broker Benson Quinn Commodities.
‘Increased demand from Mexico’
The corn stocks upgrade reflected a hike of 3.6 bushels per acre to 175.4 bushels per acre in the forecast for the US corn yield this year.
That took the figure above last year’s record high, and well beyond market expectations too, while adding nearly 300m bushels to the harvest total.
Indeed, the forecast for carryout stocks from 2017-18 would have been larger still were it not for improved hopes for exports, including to Mexico, whose sorghum crop was downgraded by 1.4m tonnes to 4.6m tonnes.
The USDA flagged “expectations of improved US competitiveness, reduced exports for Ukraine,” where harvest results have fallen short of forecasts, “and increased demand from Mexico based on sharply lower sorghum production prospects”.
‘Bearish in our opinion’
For soybeans, the USDA trimmed its forecast for domestic production by 6m bushels to 4.43bn bushels, reflecting a “fractionally lower” yield figure.
Again, this production estimate exceeded investor expectations, and meant only a marginal drop in the estimate for soybean inventories at the close of 2017-18, a figure which Terry Reilly at Futures International termed “bearish in our opinion”....MORE
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Errata (November 9, 2017):
1 In the November 2017 report, page 10 (U.S. Supply and Use for Oilseeds), forecast 2017/18 production for U.S. oilseeds has been corrected from 132.05 to 132.14 million metric tons on a revision to U.S. cottonseed production.