Chicago corn futures were set on Friday for a second week of decline, with prices trading near a one-year low as a US government forecast of record yields weighed on the market. Harvested area of corn was forecast at 83.1 million acres, unchanged from October and down 4% from previous year.
Sorghum production is forecast to be down 30 percent with 189 million bushels. Wheat was 0.20 percent lower at $4.28-1/4 a bushel.
Yields are expected to average 197 bushels per acre, up 6 bushels per acre from the October forecast. Corn production is forecast at 14.6 billion bushels, with yields projected to average a record 175.4 bushels per acre.
“We have surprisingly high USA corn yields, no one was expecting this”, said one India-based agricultural commodities analyst of a USA crop report.
The soybean crop was expected to hit a record 4.425 billion bushels, on a yield of 49.5 bpa. The projected yield surpassed the highest trade expectations and, if realised, would top a record set a year ago. An estimated 2.95 million acres will be harvested for grain.
For soybeans, slowing purchases by China remain a concern. It is no coincidence that as farmers realized increased demand and value for their crops, they were able to invest in newer technologies and practices that have driven even further improvements in yields, even in the face of increasingly challenging weather conditions.
Corn and soybean futures traded moderately lower after the report. “Nevertheless, in the short term we view price downside for CBOT corn as limited – due mainly to the reluctance of producers to sell corn at prices much below current levels, but also due to the significant net short position held by funds”.