Chicago | Reuters – The U.S. Agriculture Department on Friday raised its outlook for domestic corn and soybean harvests by a more than expected amount due to good weather during key phases of development.
The increased domestic projections, which pushed futures markets sharply lower, will boost the U.S. soybean stockpile to its biggest ever while a trade war with China threatens to shut off the top market for the oilseed.
“The bean number is so unbelievably large,” said Mark Gold with Top Third Ag Marketing. “If we don’t do a trade deal with the Chinese, the American farmer is going to be in dire straits.”
Chicago Board of Trade soybean futures sank 4.8 percent, the biggest daily decline for the most-active contract in three years. CBOT corn futures were 3 percent lower.
The government’s closely watched supply and demand report pegged U.S. soybean production and corn yields at all-time records.
USDA also lowered its outlook for global wheat production and supplies as hot and dry conditions crippled harvest prospects in the European Union.
USDA boosted its outlook for 2018/19 soybean exports to 2.060 billion bushels after sharply cutting them in July. But soybean exports were still expected to fall below the 2017/18 total.
Corn harvest for the 2018/2019 crop year was seen at 14.586 billion bushels, the third-biggest ever. Yields were raised 4.4 bushels per acre to 178.4 bushels per acre, which would top the previous record of 176.6 set a year ago.
Analysts had been expecting a corn harvest of 14.411 billion bushels and average yields of 176.2 bushels per acre, according to the average of estimates given in a Reuters poll.
USDA predicted soybean production for the 2018/19 crop year at 4.586 billion bushels, with average yields coming in at 51.6 bushels per acre. Both the yield and production outlooks topped the high end of market forecasts.
If realized, U.S. soybean production would top Brazil’s harvest. Brazil had been expected to take over the mantle as the world’s largest soybean producer for the first time this year.
“From a U.S. standpoint, it’s supply-bearish,” said Don Roose, president of U.S. Commodities. “There’s just not a lot of bullishness to talk about.”
Soybean end stocks were forecast at 430 million bushels for the 2017/18 marketing year and 785 million bushels for 2018/19. For corn, 2017/18 end stocks were seen at 2.027 billion bushels and 2018/19 end stocks were seen at 1.684 billion bushels.
– Additional reporting by Karl Plume.