U.S. raises estimates for corn, soybean production

CHICAGO (Reuters) - U.S. soybean and corn production will be bigger than previously expected, the government said on Tuesday, knocking soybean futures to their lowest price of the year.

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The U.S. Department of Agriculture (USDA) estimated the corn crop currently being harvested at 15.019 billion bushels and the soybean crop at 4.448 billion bushels in its monthly World Agricultural Supply and Demand Estimates report. The agency forecast corn yields of 176.5 bushels per acre and soybean yields of 51.5 bushels per acre.

The larger-than-expected crops could ease worries about food inflation globally and will be welcome by meatpackers concerned about high costs of crops used primarily to feed livestock.

Analysts had been expecting the report to show a corn crop of 14.973 billion bushels, based on an average yield of 176.0 bushels per acre. The average estimate for soybean harvest was 4.415 billion bushels, based on an average yield of 51.1 bushels per acre.

Last month, USDA predicted a corn crop of 14.996 billion bushels and a soy crop of 4.374 billion bushels.

Most-active soybean futures hit their lowest price since December and were down 24-3/4 cents at $12.03-1/2 a bushel. Most-active corn futures slid 8-1/2 cents to $5.24-1/2 a bushel.

“People weren’t looking for a report that was quite this bearish, and it’s mostly bearish due to the bean yield,” said Jack Scoville, analyst for the Price Futures Group in Chicago. “That’s what’s got the market collapsing today.”

USDA raised its U.S. soybean stocks outlook to 320 million bushels from 185 million in September, incorporating the larger-than-expected carry-in supplies in the United States it surprisingly signaled to the market on Sept. 30.

USDA’s 2021/22 world wheat ending stocks figure of 277.18 million tonnes missed analysts’ expectations, however, reflecting drought in the northern U.S. and Canada that hurt production. The agency said the stocks were the lowest in five years, with the United States, Australia and Iran accounting for most of the reduction.

The bump to the U.S. soy harvest forecast and the ample stocks provide a cushion to the soybean balance sheet needed to absorb surging demand for soyoil. Concerns about tight supplies pushed soybean prices to their highest in nearly a decade earlier this year, but the market has retreated in recent months as a good weather throughout the soy and corn growing season allayed fears about production shortfalls.

Corn stock also will be bigger than previously forecast, with USDA raising its 2021/22 stocks view to 1.5 billion bushels from 1.408 billion.

Reporting by Tom Polansek, Mark Weinraub and P.J. Huffstutter in Chicago; Editing by Lisa Shumaker