Markets soar on smaller U.S. crop

Corn and soybean futures rose their limit Friday morning and canola is up $18.90 per tonne in early trade after the U.S. Department of Agriculture forecast smaller than expected corn and soybean yields.The report surprised traders and sets up a price battle for acreage for the 2011 crop.USDA put the corn crop at 12.664 billion bushels based on average yield of 155.8 bu. per acre.The average of analysts’ estimates was a 12.96 billion bu. crop on the basis of a 160 bu. yield.The USDA put the soybean crop at 3.408 billion bu. based on yield of 44.4 bu. an acre.The average of analysts’ estimates was 3.475 billion bu. on a yield of 44.895 bu.With the smaller crop and expectations of strong demand, the USDA now forecasts that stocks by the end of the crop year will fall to 902 million bu., 270 million below trade expectations and below the one billion mark.USDA also tightened its forecast for year end soybean stocks to 265 million bu. and wheat to 853 million, both below the average of traders’ expectations.Wheat and canola futures also rose, buoyed by the surge in corn and soybeans.

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