Corn plummets after USDA ups forecast

Corn futures fell today on the surprise news that the US Department of Agriculture sees this year’s crop being even bigger than previously thought.

Corn futures finished down 1.2% after earlier hitting their lowest price in close to a month. The drop in price came as the USDA issued a monthly crop report in which it estimates the corn harvest for 2013 will total 13.843 billion bushels, which would be a record, higher than the 13.763 billion projected in the previous report and exceeding the market’s expectations.

Analysts had given a median estimate of 13.641 billion, based on a Bloomberg survey, slightly lower than previous estimates. The reason for this was that hot, dry weather has stricken the Midwest recently, including states such as Iowa and Illinois which are hugely important when it comes to corn farming. Today’s report from the USDA says that the adverse effects of this weather in the Midwest will be counterbalanced by increased production in the South and Great Plains, however.

The hot, dry weather did cause the USDA to lower its forecast for Soyabeans, paring its projected crop by 3% to 3.149 bushels. Soyabeans futures closed 2.9% higher today on the back of the news.

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