Trading in corn futures ground to a halt at the opening bell on Oct. 8 with prices locked up the 30c-per-bu daily limit in the wake of U.S. Department of Agriculture corn yield and production forecasts that fell well below trade expectations. Soybean futures trading also locked up with prices of most contracts up their daily limit of 70c a bu. Prices of many wheat contracts also opened limit up (60c), and when wheat contracts resumed trading, it was at sharply higher values. Government reports were perceived as bullish for wheat and soybeans as well, but it was the corn forecasts that gripped the trade’s attention and were the principal drivers in agricultural markets last week.
The U.S.D.A. forecast 2010 corn production at 12,664 million bus, down 4% from 13,160 million bus forecast in September and down 3% from a record 13,110 million bus in 2009. The government’s forecast was well below the average of pre-report trade estimates at 12,950 million bus. Based on Oct. 1 conditions, the average corn yield was forecast at 155.8 bus an acre, down 6.7 bus per acre from the September forecast and down 8.9 bus per acre from the 2009 record of 164.7 bus an acre.
“Forecasted yields decreased from last month throughout much of the Corn Belt and Tennessee Valley,” the U.S.D.A. said in commentary accompanying the corn production data. “Illinois showed the largest decline, down 14 bus per acre. Indiana and Iowa are both down 10 bus from the previous month, while Missouri and Nebraska declined nine bus per acre.” Corn area harvested for grain in 2010 was forecast at 81.3 million acres, up slightly from September and up 2% from 2009, the U.S.D.A. said.
Some in the trade expected the U.S.D.A. to make further reductions to its corn average yield and production estimates, which may keep the fire raging under corn prices stoked and continue to exert an upward pull on wheat and other agricultural markets.