Corn prices barely finished higher Wednesday as government forecasters forecast bigger-than-expected supplies next year, citing soft overseas demand for the crop.
Corn futures pared gains after the Agriculture Department pegged domestic corn reserves at 1.785 billion bushels at the end of the 2015-16 season next August, up from its forecast of 1.76 billion last month. Analysts surveyed by The Wall Street Journal had expected 1.769 billion bushels.
The USDA cut its estimate for corn exports to 1.75 billion bushels from 1.8 billion, citing “the slow pace of sales and shipments to date” and higher projected exports for Brazil and Canada. Corn and wheat shipments have suffered in part from the strong U.S. dollar, which raises the cost of American grain for foreign buyers.
The weaker export demand is further pressuring a U.S. corn market already weighed down by three straight years of bumper harvests. Prices are down more than 50% from records reached amid the severe 2012 U.S. drought.
“There’s a lot of world competition in the corn market right now and that’s really been hurting the U.S. market,” said Brian Hoops, president of Midwest Market Solutions Inc., a commodity-market advisory and brokerage firm in Springfield, Mo. He added that “it’s become clear USDA overestimated their earlier forecasts” for shipments of the grains.
Corn futures for December delivery, the front-month contract, advanced 1 3/4 cents, or 0.5%, to $3.71 3/4 a bushel at the Chicago Board of Trade. Most actively traded March futures added 1/4 cent, or 0.1%, to $3.73 3/4 a bushel. December corn futures traded more than six cents higher before the noon ET release of the USDA report.
Soybean futures finished unchanged after recovering from initial declines after the USDA maintained its forecast for domestic supplies, pegging inventories at 465 million bushels at the end of the 2015-16 season. Analysts had expected 466 million bushels.
Like corn, soybean futures have been under pressure from large U.S. harvests.
Most-active CBOT January soybean futures were unchanged at $8.76 3/4 a bushel.
Wheat prices finished at a two-week high after the USDA maintained its estimate for U.S. stockpiles while raising its outlook for global reserves
The USDA projected domestic inventories of wheat at the end of the 2015-16 season next May 31 at 911 million bushels. Analysts anticipated a forecast of 917 million bushels.
Worldwide, the government estimated wheat stockpiles for the 2015-16 season would total 229.9 million metric tons, up from last month’s estimate of 227.3 million tons. Analysts projected 226.8 million tons.
CBOT December wheat futures rose 7 1/4 cents, or 1.5%, to $4.78 a bushel, the highest closing price for a front-month contract since Nov. 25. Most actively traded March futures climbed 8 1/4 cents, or 1.7%, to $4.89 3/4 a bushel.
Wheat futures earlier this month traded at the lowest levels in more than five years.
“We’re just swimming in wheat right now, and that’s not likely to change anytime soon,” said Jim Gerlach, president of brokerage A/C Trading Co. in Fowler, Ind.
(Source – http://www.wsj.com/articles/corn-prices-fall-after-usda-raises-supply-outlook-1449687095)