Corn, Wheat Spike After U.S. Cuts Forecasts on Midwest Flooding

Daniel Fowler
June 13, 2019

Chicago Board of Trade (CBOT) agricultural futures settled higher on Tuesday, with corn rising almost 3 percent, as a monthly demand and supply report sharply lowered USA production estimates.

China's soybean imports fell 24% in May from the same month past year, customs data showed on Monday, as the ongoing Sino-U.S. trade war and deadly African swine fever checked demand.

Corn markets saw a price bump following the release of the report, said Chad Hart, associate professor of economics, crop markets specialist and Extension economist with Iowa State University.

"Production growth for livestock and poultry is expected to be slower as producers respond to higher feed costs", the USDA's World Agricultural Outlook Board said in a report. Corn production for 2019-'20 is forecast to decline 1.4 billion bushels to 13.7 billion, which if realized would be the lowest since 2015/16. "We're going to see higher feed costs". As a result, the 2019 all-milk price was forecast at $18 per hundredweight (cwt), down a nickel from last month, but up $1.74 per cwt from 2018 and the highest average since the record high of $23.97 per cwt set in 2014. Corn planting is normally finished by this time of year. Unprecedented planting delays observed through early June were expected to prevent some plantings and reduce yield prospects. The season-average farm price is raised 50 cents to $3.80 per bushel.

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USDA left soybean yield unchanged from May at 49.5 bpa and production at 4.15 billion bushel.

The CBOT's most active soybean contract fell 0.5 percent to $8.51-3/4 a bushel. With supplies falling more than use, ending stocks are projected to decline 810 million bushels to 1.7 billion, which if realized would be the lowest since 2013-'14.

It is anticipated that the acreage could fall again when the acres planted report is released at the end of the month, he said.

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