Corn futures (CBOT:CZ13) rallied the most since August on signs that the record harvest in the U.S., the world’s largest grower, will be smaller than analysts expected. Soybeans also gained, while wheat declined.
Farmers will produce the biggest corn-crop ever at 13.989 billion bushels, the U.S. Department of Agriculture said Nov. 8. That was less than the 14.029 billion expected by analysts in a Bloomberg survey. Prices as of Nov. 8 were down 50% from a record reached during a drought last year, touching a three-year low, as output was set to surge 30%.
Prices “have virtually bottomed out,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in an e-mailed report. “The USDA’s figure for the U.S. corn crop remained below the 14 billion-bushel threshold. Although the per-acre yield was upwardly corrected by a significant amount, the acreage itself was reduced.”
Corn futures for delivery in December advanced 1.9% to close at $4.3475 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest gain for a most-active contract since Aug. 26. Earlier, the grain touched $4.3725, the highest since Oct. 28. Before the USDA forecast on Nov. 8, futures touched $4.155, the lowest since August 2010.
The USDA also raised its forecast for U.S. corn exports to 1.4 billion bushels during the 12 months that began Sept. 1, up 92% from a year earlier. Domestic inventories at the end of the 2013-14 season may double to 1.887 billion bushels, less than the 2.044 billion expected by analysts.
Money managers held a net-short position of 178,720 corn futures and options contracts on Nov. 5, down from a record 180,627 a week earlier, government data show. Investors have bet on lower prices since June.
“The new forecasts for corn are generally within the range of expectations, although the market may have been expecting slightly larger production and year-ending stocks estimates,” Darrel Good, an agricultural economist at the University of Illinois in Champaign-Urbana, said in a report. “However, prospects of surplus supplies will likely limit the extent of any price recovery.”
Soybean futures for delivery in January rose 0.4% to $13.01 a bushel on the CBOT, capping the first four-session gain since Oct. 7. Global inventories before next year’s harvest will total 70.23 million metric tons, the USDA report showed, below the 71.54 million predicted two months earlier.
U.S. production will be 3.258 billion bushels, the third- biggest ever, the government estimates. Exports may rise 9.8% to 1.45 billion bushels.
“The market is rising to get soybeans out of farmers hands,” Jerry Gidel, the chief feed-grain analyst for Rice Dairy LLC in Chicago, said in a telephone interview. “Processors and livestock producers want to make sure they have enough bought to get them through the winter months, when farmers tend not to be selling.”
Wheat futures for delivery in December fell 0.5% to $6.4625 a bushel, after declining 2.7% last week on improving U.S. crop conditions.