Yesterday the USDA announced that it expects American farmers to harvest a record of 13.8 billion bushels of corn for the year. While the number easily surpasses the previous record of 13.1 billion, it falls short of what many analysts and investors were expecting. The contraction in expected crop production led to a rally in corn prices yesterday that is spilling over into this morning. The drop in harvest and rise in price is sure to be painful for the record number of short positions betting against corn prices.
Corn futures for September delivery, the front-month contract, settled up 6.25 cents, or 1.3%, at $4.72 a bushel at the Chicago Board of Trade. December corn futures, the contract most closely aligned with the fall harvest, rose 10.75 cents, or 2.4%, to $4.64 a bushel.
In the same report the agency cut forecasted production for soybeans, sending prices higher for those future contracts as well. While the harvest will be the third largest in U.S. history, it is about 5% smaller than previously estimated, coming in at 3.225 billion bushels.
CBOT August soybean futures rose 33 cents, or 2.5%, to $13.7375 a bushel, a more than one-week high. Soybean futures have dropped 22% from last September’s record settlement of $17.71 a bushel.
Expectations for wheat production were left unchanged. It is also worth noting that these numbers are estimates and can be revised again between now and the end of the year.
