U.S. Raises Corn-Surplus Forecast as Exports Seen Declining

  • Corn futures fall after government report, then erase loss
  • Soybeans drop on beneficial weather outlook in Brazil

U.S. corn inventories before next year’s harvest will be higher than forecast in November as competition with Brazil and Canada erodes exports, a government report showed.

Stockpiles on Aug. 31 will be 1.785 billion bushels, up 1.4 percent from last month’s estimate, the U.S. Department of Agriculture in Washington said Wednesday in a report. Analysts in a Bloomberg survey forecast a surplus of 1.761 billion, on average. Corn futures fell as much as 0.9 percent in Chicago after the data was released at noon. Earlier, the price climbed as much as 1.5 percent.

The department’s forecast for exports from the U.S., the world’s biggest shipper, was reduced by 50 million bushels to 1.75 billion. In the year that began Sept. 1, exports have been trailing year-earlier levels as a strong dollar and large global supplies erode the appeal of U.S. grain.

“Corn needed to have the export number reduced because we’re not keeping up with the forecast pace,” Alan Brugler, president of Brugler Marketing & Management in Omaha, said in a telephone interview.

Corn futures for March delivery rose 0.1 percent to close at $3.7375 a bushel on the Chicago Board of Trade. The price dropped 5.9 percent this year.

The USDA said the lower export forecast reflects “the slow pace of sales and shipments to date.”

Brazil Outlook

The agency boosted its outlook for Brazil’s exports in 2104-15 to a record 32 million metric tons from 31 million, saying the increase will add “additional pressure” on U.S. trade. Canada’s export forecast in 2015-16 was raised to 1 million tons from 500,000.

The USDA raised its outlook for global wheat inventories by 1.1 percent to a record 229.86 million metric tons, citing higher production in Canada and the European Union.

Wheat futures for March delivery rose 1.7 percent to $4.8975 a bushel. Earlier, the price climbed as much as 2 percent.

The USDA boosted its estimates for Argentina’s shipments of wheat, soybeans and products made from the oilseed, citing expectations for the country’s new government to reduce export restrictions. President-elect Mauricio Macri is set to take office Thursday.

Soybean Market

Soybeans closed unchanged after earlier falling as much as 0.8 percent on speculation that beneficial rain will boost crops in Brazil, the top exporter.

Rain overnight and more next week will improve soil moisture, Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview.

Soybean futures for January delivery settled at $8.7675 a bushel. The oilseed has dropped 14 percent this year.

Parts of central and northern Brazil got as much as 1.25 inches (3.2 centimeters) of rain in the past 24 hours, and most of the country will get as much as 4 inches in the next four days, MDA Information Systems LLC in Gaithersburg, Maryland, said in a report.

In the U.S., the government left its forecast for domestic inventories before the 2016 harvest unchanged at 465 million bushels, more than double 191 million this year.

“The lack of any bullish surprises in the USDA report pushed the market back into a downtrend” before prices pared losses, Durchholz said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE