Corn futures for September climbed 1.3% by early afternoon in Chicago and soyabeans for November rose more than 3% following the release of the US Department of Agriculture’s August crop production forecast.
The August report is one of the most highly anticipated reports from the USDA and took the market a little by surprise, with no major changes having been expected to be made to the yields. The USDA said that it now expects US farmers to produce 13.763 billion bushels of corn in the Autumn harvest this year, however, down from the 13.95 billion estimated last month. Farmers are forecast to harvest 3.255 billion bushels of soyabeans. Once again this is less than last month’s projections, when 3.42 billion bushels was forecast.
Such numbers would still be record harvests, but coming in lower than expectations has provided support to the prices of the commodities. Both corn and soyabeans have been in bear market territory so far this year, with the expected size of the harvest having depressed prices and prior to the release of today’s report both corn and soyabeans were trading down. Corn has dropped 40% since last summer, when severe drought conditions adversely affected the crop.
The historically high price of corn going into this year led to farmers planting a huge crop, but extended rains in the late spring and early summer this year have hindered the planting season and cool, dry conditions over the last few weeks have impeded the crops’ progress.
Despite today’s bounce in the price of corn, and despite estimates still being prone to further amendments, the crop is still likely to be colossal and it remains to be seen whether the bear market will be arrested in the long run.