CHICAGO, Ill. – U.S. corn and spring wheat crops are smaller than expected, but the U.S. Department of Agriculture’s new production estimate wasn’t low enough to rally markets.
The Sept. 12 USDA report trimmed its estimate for 1997 U.S. corn production to 9.27 billion bushels and some analysts expect its forecast of harvest size to shrink further in coming months.
However, the department estimated Chinese corn production and exports are better than expected, which will reduce expected U.S. exports and increase the carryover into the 1998-99 crop year.
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The December futures contract fell 8.25 cents to settle at $2.64 (U.S.) a bushel on Sept. 12. Traders believed the rally preceding the USDA announcement, which saw corn rise almost 10 cents over the week to $2.72 a bushel on Sept. 11, had already accounted for the smaller crop.
Unstable market
“The corn number is surprising and tells you there’s a lot of uncertainty,” said Anthony Danielak, vice-president of Harris Futures, Chicago. He and other market analysts spoke about the report on a panel sponsored by the Chicago Board of Trade.
The USDA also cut the estimate of domestic wheat production, due mainly to a four percent cut in the spring wheat crop.
Projected returns
Its projected price range is up 15 cents on the bottom and five cents on the top to $3.20-$3.70 (U.S.) per bushel. Global production is little changed from last month as larger crops in Russia, Eastern Europe, and Mexico offset smaller output in the United States, Canada, the European Union and Syria.
Durum production is forecast at 90.2 million bushels, unchanged from last month, but still well below last year.
Analysts said the USDA’s soybean production estimate was not extremely bullish but was supportive to soybean prices.
“I was surprised. I thought they (USDA) would raise their bean number more,” Danielak said.
USDA projected 1997 U.S. soybean production at a record 2.75 billion bushels, slightly above the August forecast and slightly below many analysts’ estimates.
“There was some talk we could see a 2.8 billion bushel number but they left it unchanged and there’s good demand,” Danielak said.
