Chicago/Reuters – U.S. soybean futures bounced on Friday after a surprise increase in the Department of Agriculture’s autumn harvest forecast knocked prices to six-year lows.
Corn futures neared one-month highs after the USDA, in a monthly report, reduced its production estimate, igniting supply concerns.
Traders are focused on the size of the crops because prices have tumbled over the past year due to massive harvests in 2014. Some suspect that the USDA may be overstating yields this year amid industry reports of lower-than-expected results from early harvests.
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Uncertainty about the harvests drove late gains in the markets after soybeans tumbled earlier in the session, said Jack Scoville, vice president for Price Futures Group in Chicago. The markets will likely stabilize while waiting for more yield reports, he added.
“There’s a lot of fear that the yields are not out there,” Scoville said. “If the yields are gang busters, then we’re probably headed right back down again” in prices.
Chicago Board of Trade November soybeans, the most actively traded contract, ended up 1/4 cent to $8.74-1/4 a bushel after setting a contract low of $8.53-1/4.
Thinly traded, nearby September soybeans rose 3-1/4 cents to $8.87-3/4 after reaching a session low of $8.66, the lowest price for a front-month contract on a continuous chart since March 2009.
December corn advanced 12-3/4 cents to $3.87 after trading up to $3.87-1/2, the contract’s highest price since Aug. 12. December wheat gained 7 cents to $4.85.
Better-than-expected demand projections helped support prices, Scoville said.
The USDA did not cut its 2015/16 corn or soybean export forecasts, as many traders had expected, and raised its estimate for how many soybeans will be crushed domestically.
The USDA projected the average U.S. corn yield at 167.5 bushels an acre, below its August estimate of 168.8 bushels and the average trade estimate of 167.6 bushels.
The soybean yield was pegged at 47.1 bushels, above the USDA’s August estimate of 46.9 bushels. Analysts were expecting the agency to trim its estimate to 46.4 bushels.
Traders have worried that hot, dry weather hurt crops last month, and the USDA is “at risk of winding up with egg on their face” after raising its soybean yield estimate, said Bob Utterback, head of Utterback Marketing in Indiana.
“I thought USDA was supposed to give clarity,” he said. “How do you increase bean yields and reduce corn yields with the weather we’ve had in August?”
Additional reporting by Gus Trompiz in Paris and Colin Packham in Sydney
