Corn and soybeans fell to four-year lows after the U.S. forecast record harvests and expanding global inventories that will help limit gains in food inflation.
Domestic farmers will collect 14.395 billion bushels of corn in the season that started Sept. 1, while the soybean harvest will climb to 3.913 billion bushels, the U.S. Department of Agriculture said today. Those are the biggest crops ever and topped analyst forecasts.
Three months of rain and mild weather created almost ideal growing conditions, and the USDA forecast yields at all-time highs for both crops. Two years after the worst U.S. drought in a century cut output and sent prices to the highest ever, bigger harvests are lowering costs for buyers including Tyson Foods Inc., while cutting demand for farm machinery and threatening to reduce farmland values.
“We have burdensome supplies in the U.S. and around the world,” Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “Today’s jump in production entrenches the bear-market outlook for the next year, or until there is a weather problem.”
Corn futures for December delivery fell 1.4 percent to close at $3.41 a bushel at 1:15 p.m. on the Chicago Board of Trade. Prices earlier touched $3.3575, the lowest since June 30, 2010.
Domestic reserves of corn on Aug. 31, 2015, before next year’s harvest, will total 2.002 billion bushels, compared with 1.808 billion (45.93 million metric tons) forecast in August, the USDA said. Analysts surveyed by Bloomberg were expecting 1.995 billion, on average.
Global inventories at the end of the marketing year will be 189.91 million tons, up from 187.82 million predicted in August, the USDA said.
Larger supplies are helping to keep global food inflation in check, with the United Nations reporting today that prices in August fell to the lowest in almost four years.
Soybean futures for November delivery dropped 1.2 percent to $9.815 a bushel on the CBOT, after touching $9.695, the lowest since July 2010.
“With today’s increase in U.S. yields, the market will expect supplies to get bigger when the final results are calculated,” Roose said. “The burdensome supplies suggests soybeans below $9 a bushel and corn below $3.”
World soybean inventories before the start of the 2015 Northern Hemisphere harvests will rise to a record 90.17 million tons, from 66.91 million predicted this year, the USDA said. Traders expected reserves to rise to 86.08 million, on average.
“This is a clearly bearish report across the board,” Rich Nelson, the chief strategist at Allendale Inc. in McHenry, Illinois, said in a telephone interview.