Government raises U.S. production forecast and export prospects



By Jesse Newman

CHICAGO—Government forecasters again boosted their outlook for a record U.S. soybean harvest but stopped short of the crop projections that have unnerved investors over the past several months.

Corn production is also set for a record year and with plentiful domestic supplies of other crops such as wheat and rice, the U.S. has become more reliant on export markets to absorb the bumper harvests.

A relief rally in soybean futures after the latest monthly update was released Wednesday by the U.S. Department of Agriculture quickly evaporated, and corn and wheat prices both fell sharply.

U.S. farmers are expected to harvest a record 4.269 billion bushels of soybeans, just shy of analysts’ expectations. The bump-up yield of 51.4 bushels an acre following August rains was in line with trade guesses, with some concerned yields could top 52 bushels.

“We didn’t get the shockingly high soybean yield that some people thought we’d see,” said Doug Bergman of RCM Asset Management.

The November soybean contract at the Chicago Board of Trade climbed as high as $9.71 1/4 a bushel but retreated 8 3/4 cents, or 0.9%, to $9.45 1/2 at the market close.



Soybeans were harvested near Princeton, Ill., on Sept. 29. Prices for the crop went up Wednesday after the U.S. Department of Agriculture raised its fall production outlook.
Photo: Daniel Acker/Bloomberg News





“Harvest reports from around the country have been phenomenal,” said Mr. Bergman, and investors are focused on where the crop will find buyers, especially overseas. The USDA announced another purchase by China on Wednesday.

Corn futures sagged after an early gain, even as the USDA trimmed its production forecast from September. The agency expects production to reach a record 15.057 billion bushels on yields of 173.4 bushels an acre this fall. That compares to analysts’ estimates for 15.04 billion bushels.

CBOT December corn fell 8 1/2 cents, or 2.5%, to $3.37 a bushel.

Wheat prices initially advanced after the USDA projected slightly smaller-than-expected U.S. stockpiles, before losing ground.

The USDA said domestic wheat reserves at the end of the 2016-17 season in May would total 1.138 billion bushels, which is up from its September estimate of 1.1 billion bushels but lower than analysts’ average guess of 1.151 billion bushels.

CBOT December wheat futures declined 10 1/2 cents, or 2.6%, to $3.96 3/4 a bushel.

The USDA was bullish on export prospects, bumping up projected 2016-17 soybean shipments by 40 million bushels at the expense of Argentine sales. Wheat-export expectations were raised by 25 million bushels, reflecting sales success in North Africa that is taking share from European Union sellers, the USDA notes.

Meanwhile, anticipated corn exports climbed 50 million bushels as current commitments are well above prior-year levels. With global grain and oilseed production at record highs, the USDA also expects rice output to top previous years.

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