CHICAGO (Reuters) - The U.S. soybean crop will be smaller than expected but stocks are forecast to rise sharply as a trade fight with China weighs heavily on exports, the U.S. Agriculture Department said on Thursday.
The government also trimmed its outlook for domestic corn production in its monthly supply and demand report, with yields from the ongoing harvest coming in below expectations.
Chicago Board of Trade soybean futures <0#S:> fell sharply after the report was released, with the most active January contract sinking 1.6 percent to a one-week low.
“Finally, USDA is aggressive in lowering its forecast for the U.S. export program for soybeans,” said Terry Reilly senior analyst with Futures International in Chicago.
USDA forecast 2018/19 U.S. soybean production at 4.600 billion bushels, down from its previous estimate of 4.690 billion bushels. It also lowered its average soybean yield estimate to 52.1 bushels per acre compared with 53.1 bushels per acre a month ago.
Despite the cuts, the soybean harvest and yield forecasts would still be the biggest ever, if realized.
Analysts had been expecting a soybean crop of 4.676 billion bushels and yields of 52.9 bushels per acre, based on the average of analysts estimates in a Reuters poll.
USDA boosted its estimate of 2018/19 soybean ending stocks, which had already been projected at a record high, to 955 million bushels, topping the average estimate of 898 million bushels. It slashed its export outlook for the current marketing year to 1.900 billion bushels from 2.060 billion bushels.
“I think we’re still headed over that one-billion-bushel threshold if the China-U.S. trade spat doesn’t end,” Reilly said.
For corn, the government pegged U.S. production at 14.626 billion bushels, based on an average yield of 178.9 bushels per acre. In October, USDA had forecast the corn harvest at 14.778 billion bushels and yields at 180.8 bushels per acre.
Domestic corn stocks were pegged at 1.736 billion bushels, down from the government’s October forecast of 1.813 million bushels. Analysts, on average, had been expecting 1.773 billion bushels.
CBOT corn futures <0#C:>, which had been trading slightly higher before the report was released, dropped 1.5 percent.
USDA also nearly doubled its estimate of world corn supplies to 307.51 million tonnes, following China’s sharp revision to its production data for the past 10 years.
It put 2018/19 global soybean ending stocks at 112.08 million tonnes and global wheat ending stocks at 266.71 million tonnes.
Additional reporting by Julie Ingwersen; Editing by Tom Brown