U.S. grains: Futures surge to highest since 2014 as USDA cuts supply outlook

Wheat futures at six-year high; corn, soy at 6-1/2 year highs

CBOT March 2021 corn with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. corn, soybean and wheat futures surged to fresh multi-year highs on Tuesday after the U.S. Department of Agriculture (USDA) said 2020 U.S. corn and soy harvests were smaller than expected and stocks of key crops were thinner that previously thought.

Corn jumped by as much as five per cent, while soybeans added nearly four per cent and wheat gained almost five per cent.

The surge took prices to highs not seen since 2014.

In its eagerly awaited series of January reports, USDA pegged the 2020 U.S. corn harvest at 14.182 billion bushels based on an average yield of 172 bushels per acre and soybean production at 4.135 billion bushels on a yield of 50.2. All were below average trade expectations, particularly corn.

USDA also forecast end-of-season corn and wheat supplies below trade estimates, and confirmed investor fears of the tightest U.S. soybean stocks in seven years.

“Nobody was expecting corn production to drop like that,” said Jack Scoville, analyst with The Price Group. “They (USDA) underestimated the damage from the drought and the derecho and probably overestimated some of the better areas.”

Chicago Board of Trade (CBOT) March corn ended up the daily 25-cent limit at $5.17-1/4 a bushel, the highest level for a most-active contract since May 2014 (all figures US$). May and June futures were also limit-up, and all three were trading synthetically through options about eight cents above closing prices.

Corn trading limits will expand to 40 cents on Wednesday following the limit-up close, CME Group said.

March soybeans jumped 45-3/4 cents to $14.18-1/4 a bushel, the highest for a most-active soy contract since June 2014. CBOT March wheat gained 30-1/4 cents to $6.65 a bushel, the highest since December 2014.

Concerns about available supplies from key exporters added support. Argentina has moved to curb corn exports, while top wheat exporter Russia is considering raising a previously announced export tax on the grain.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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