WASHINGTON (Reuters) - The U.S. Agriculture Department unexpectedly raised its U.S. corn and soybean harvest forecasts on Tuesday, adding further bearish pressure to a market already struggling with massive global supplies.
The harvest outlooks, issued in the government’s closely watched Crop Production report, topped market forecasts for the second straight month.
Chicago Board of Trade corn and soybean futures, which were trading in negative territory before the report was released, dropped to session lows. Both hit their lowest levels since Aug. 31.
“They are keeping the numbers good and high,” said Jack Scoville, broker at the Price Futures Group. “Every time you try to get bullish on the crop (prices), it’s been stupid. It seems like this year so far, that’s been the case.”
The impact to the soybean balance sheet was mitigated by strong U.S. exports, but corn supplies will rise as demand from ethanol and food, seed and industrial sectors was seen falling.
U.S. corn production in the 2017/18 crop year will total 14.184 billion bushels, based on an average yield of 169.9 bushels per acre, USDA said in the report. That compares with the government’s month-ago corn forecasts of 14.153 billion bushels for production and 169.5 bushels per acre for yield.
Farmers also will harvest a record 4.431 billion bushels of soybeans, USDA said, based on an average yield of 49.9 bushels per acre. In August, USDA pegged the soybean harvest at 4.381 billion bushels, based on a yield of 49.4 bushels per acre.
Both the soybean production and yield outlooks topped the range of estimates in a Reuters survey of analysts.
Analysts, on average, had expected corn production of 14.035 billion bushels and a yield of 168.2 bushels per acre.
USDA noted that its September crop outlook does not account for flooding in parts of southeastern Texas and southwestern Louisiana caused by Hurricane Harvey. Additionally, due to Hurricane Irma, USDA will collect harvested acreage data for impacted states ahead of its October Crop Production report.
U.S. corn ending stocks for the 2017/18 crop year were pegged at 2.335 billion bushels, up from 2.273 billion bushels in the USDA’s August World Agriculture Supply and Demand Estimates report.
Domestic soybean ending stocks for 2017/18 were left unchanged at 475 million bushels. USDA raised its export outlook for soybeans by 25 million bushels in 2017/18 and by 20 million bushels in 2016/17.
Reporting by Mark Weinraub; Editing by Paul Simao and Matthew Lewis