CHICAGO, Aug 12 (Reuters) – U.S. soybean futures plunged roughly six percent and both corn and soybeans briefly fell their respective daily limits on Wednesday after the U.S. Department of Agriculture surprised traders by raising its estimates of domestic corn and soybean crops in a monthly report.
Analysts surveyed by Reuters had expected the USDA to lower its yield and production forecasts for both crops following excessive rains in spring and early summer.
Instead, the government pegged the U.S. corn yield at 168.8 bushels per acre (bpa), up from 166.8 previously and the second highest on record, if realized. The USDA projected the soybean yield at 46.9 bpa, up from 46.0 previously.
Read Also
Government to invest in biofuel production
The federal government will invest $370 million in a new biofuel production incentive.
“A shocker, pure and simple; corn and bean yields were outside of the bell curve of expectations,” said Charlie Sernatinger, an analyst with ED&F Man Capital.
At the Chicago Board of Trade as of 12:45 p.m. CDT, new-crop November soybeans were down 58 cents at $9.13-1/4 per bushel after dipping to $9.01-1/2, down the contract’s daily 70-cent limit.
New-crop CBOT December corn was down 18-1/4 cents at $3.69-1/4 a bushel after hitting $3.57-1/2, a life-of-contract low that was down the product’s 30-cent limit.
Wheat followed the weaker trend after USDA raised its projections of U.S. and world 2015-16 wheat ending stocks. CBOT September wheat was down 12 cents at $4.95-1/4 a bushel.
CBOT soybeans came under pressure ahead of the USDA reports on news that China again allowed its currency to lose value, creating worry that Chinese soybean imports could be reduced.
The currency moves were only the latest challenge for U.S. soy exporters already facing their slowest sales pace in seven years as huge South American supplies and a strong dollar have been crimping demand for U.S. shipments for months.
Underscoring the trend, the USDA on Wednesday lowered its U.S. soybean export forecast for 2015-16 by 50 million bushels.
“I don’t think that is the last reduction we are going to see there. The United States is not the player in the global soybean market that we used to be,” said Karl Setzer, market analyst with the MaxYield Cooperative in West Bend, Iowa.
