U.S. Corn Production Outlook Beats Estimates on Yield Boostby
Futures fall to lowest since 2014; output to rise to record
Soybean prices drop as U.S. forecasts biggest crop ever
U.S. farmers are poised to collect a bigger-than-anticipated corn crop, according to the latest government outlook, as favorable Midwest weather boosts yield potential.
Domestic production will total 15.153 billion bushels in the 2016-17 season, an all-time high, the U.S. Department of Agriculture said in its monthly World Agricultural Supply and Demand Estimates, or WASDE, report released Friday.
The amount is higher than the agency’s July outlook for 14.54 billion bushels. It also surpasses the average estimate for 14.772 billion -- as well as the highest individual estimate -- in a Bloomberg survey of analysts. The USDA pegged yields at 175.1 bushels per acre, compared with the average estimate of 170.6 bushels.
“This is one of the most bearish crop-production estimates for the U.S. we have seen in a while for a USDA August report,” Terry Reilly, senior commodity analyst at Chicago-based Futures International LLC, said in a note. Corn prices at $2.95 to $3.05 a bushel are “not out of reach,” he said.
After the report, corn futures for December delivery fell as much as 2.8 percent to $3.225 on the Chicago Board of Trade, the lowest for a most-active contract since Oct. 3, 2014. At 11:37 a.m. local time, the price fell 2.3 percent to $3.24.
An increase in U.S. output will add to the buffer in global grain supplies and benefit livestock farmers and ethanol makers, who use corn for animal feed and fuel production.
“Nearly all Corn Belt states, with the exception of Minnesota and South Dakota, are forecast to have yields above a year ago,” the USDA said in the report.
The U.S. is the world’s largest grower and exporter. The latest production estimates are the first of the season that the USDA compiles based on a survey of field samples and farmer interviews.
Soybean futures for November delivery fell 1.7 percent to $9.67 a bushel in Chicago. The USDA forecast a domestic crop of 4.06 billion bushels, the biggest ever. The oilseed is the second-largest U.S. crop.