* Corn sets fresh seven-week low on USDA forecast
* Outlook takes some supply fear out of corn market-analyst
* Government sees smaller-than-expected soybean crop
(Recasts; adds USDA data, changes dateline, pvs
By Tom Polansek
CHICAGO, Sept 12 U.S. corn futures fell to a new
seven-week low on Wednesday after the U.S. government issued a
larger-than-expected harvest outlook, despite the crop being
devastated by the worst drought in more than half a century.
Soybean futures, which had pulled back 5 percent from a
record high reached last week, jumped on a smaller-than-expected
production forecast. Corn futures have dropped almost 10 percent
from a record high touched earlier this summer.
The U.S. Department of Agriculture, in a closely watched
supply-demand report, estimated the corn harvest at 10.727
billion bushels, down slightly from last month but above the
average analyst estimate of 10.38 billion.
The soybean harvest was pegged at 2.634 billion bushels,
down from last month and below the average analyst estimate of
2.657 billion bushels.
Trade estimates for US corn/soy production:
Estimates for US ending stocks:
Trade estimates for global ending stocks:
Graphic: production, stocks: link.reuters.com/myr45s
Graphic: U.S. harvested acres:link.reuters.com/zyt22t
"Clearly it was bullish beans and bearish corn," Charlie
Sernatinger of ABN AMRO in Chicago said about the report.
Chicago Board of Trade new-crop December corn slid 1.2
percent to $7.68-1/2 a bushel by 8:35 a.m. Central time.
November soybeans rose 1.2 percent to $17.22-1/4 a bushel
after falling to a three-week low on Tuesday. December wheat
slipped 0.7 percent to $8.77-1/2 a bushel.
Corn and soy futures reached their highs during the summer
as the drought slashed harvest prospects at a time when stocks
of the crops were already low.
However, with the fall harvest running faster than usual,
the USDA lowered its corn forecast by less than 1 percent;
traders had expected a cut of nearly 4 percent from August.
The surplus of corn at the end of this marketing year would
be the smallest since 1996, but 24 percent larger than analysts'
"At least initially looking at the headline numbers, it's
going to take some of the fear of super short production out of
this market," Jack Scoville, vice president of Price Futures
Group, said about corn.
The smaller-than-expected forecast for the soybean crop
surprised some traders and analysts, who had thought the USDA
may raise its production outlook from last month due to
beneficial rains in late August.
USDA cut its forecast of the soybean crop 2 percent from its
August figure - twice the cut expected by traders. It said the
carry-over at the end of the marketing year would be the
smallest in eight years although slightly larger than expected.
Prices at 8:21 a.m. CDT (1321 GMT)
LAST NET PCT YTD
CHG CHG CHG
CBOT corn 773.50 -8.75 -1.1% 19.6%
CBOT soy 1711.00 14.50 0.9% 42.8%
CBOT meal 528.60 4.70 0.9% 70.8%
CBOT soyoil 55.94 0.47 0.9% 7.4%
CBOT wheat 849.00 -11.00 -1.3% 30.1%
CBOT rice 1492.00 20.00 1.4% 2.2%
EU wheat 261.25 -2.25 -0.9% 29.0%
US crude 97.15 -0.01 0.0% -1.7%
Dow Jones n/a
Gold 1738.30 6.66 0.4% 11.2%
Euro/dollar 1.2906 0.0052 0.4% -0.3%
Dollar Index 79.6860 -0.1710 -0.2% -0.6%
Baltic Freight 661 -1 -0.2% -62.0%
(Additional reporting by Julie Ingwersen; Editing by Keiron
Henderson and Maureen Bavdek)