November 12, 2008
USDA report overshadows grain prices
Grain prices lost earlier gains on Monday (10 November) after a government report predicted a drop in corn and soy production this year.
Agriculture futures climbed in early trading on the Chicago Board of Trade in response to a US$586 billion stimulus package in China, said Jason Ward, a market analyst at Northstar Commodity in Minneapolis. China's plans to revamp its economy through a mix of spending, subsidies, looser credit policies and tax cuts also caused rallies in Asian and European markets.
However a report from the Agriculture Department dampened some of investors' upbeat sentiment, Ward said.
The USDA lowered its forecasts for this year's U.S. corn and soy harvests, with corn production now expected to come in below analysts' estimates.
The department said corn production is expected to be 12.02 billion bushels, down from last month's revised estimate of 12.03 billion and below analysts' estimates of 12.08 billion. Corn yield per acre is expected to come in at 153.8 bushels, down from last month's estimate of 153.9.
The soy harvest is forecast to be 2.92 billion bushels, down from 2.94 billion, according to the USDA's November report. The new projection matched analysts' estimates.
Soy yield per acre is expected to be 39.3 bushels, down from 39.5 last month.
Corn for December delivery fell 1.25 cents to US$3.7425 a bushel in afternoon trading, after rising as high as US$3.85 earlier in the session. January soybeans fell 1.5 cents to US$9.195 a bushel, while December wheat futures fell 15 cents to 5.06 a bushel, after rising as high as US$5.31 a bushel earlier in the session.