July 13, 2020
US drops wheat, corn crop forecasts as farmers cut acreage
The US dropped its domestic corn and wheat harvest estimates on Thursday due to a cut in landforecasts, Reuters reported.
Yields were still expected to remain robust due to good crop weather.
The USDA's 2020/21 wheat production outlook for 1.824 billion bushels was 2.8% below its June forecast and near the low end of market expectations. The cut sparked a rally in wheat futures, which jumped to their highest since April 24 after the data was released.
USDA pegged average wheat yields at 49.7 bushels per acre, down 0.1 bushels from its June estimate and the third largest on record if realised. US farmers are about halfway through the harvest of the winter wheat they seeded last fall.
"Traders may have been caught off guard by winter wheat production declining as much as it did, but a lot of that is reflected in the acreage," said Terry Reilly, senior commodity analyst for Futures International.
Corn production for the 2020/21 marketing year was pegged at 15 billion bushels, based on a yield of 178.5 bushels per acre, USDA said in its monthly supply and demand report. That compares with the government's June estimate of a 15.995-billion-bushel harvest and yields of 178.5 bushels per acre.
Corn futures, which had been trading lower before the report was released, sank 3% to a 10-day low.
"If the weather forecasts are fine, and the market doesn't see a threat to yields, there's probably too much weather premium in," said Craig Turner of Daniels Trading. "The USDA's not going to update any kind of yield projections until a month from now."
Soybean production was seen at 4.135 billion bushels, up from the June outlook for 4.125 billion bushels. Average yield expectations were unchanged at 49.8 bushels per acre.