Futures plunge after USDA raises supply outlook, trims some demand
CHICAGO — U.S. grain and soybean futures fell sharply on Tuesday after the U.S. Department of Agriculture (USDA) boosted key crop supply forecasts and scaled back some demand expectations in a monthly report.
Benchmark corn, soy and wheat futures all retreated back to pre-Ukraine war levels as soaring costs since Russia’s invasion and broader economic concerns dented demand.
The USDA’s supply-and-demand data heaped further pressure on grain values already weighed down by slumping outside market influences, including sharply lower energy prices and a stronger U.S. dollar.
The USDA reduced its U.S. corn demand view for the current season on Tuesday and raised its forecast for domestic corn production. It also cut its forecast for the country’s soybean harvest.
The bearish data overshadowed lingering concerns about crop-stressing heat and dryness across the U.S. Midwest.
“They’re putting weather and supply issues on the back burner. The USDA helped feed that demand-led break to the downside,” said Mike Zuzolo, president of Global Commodity Analytics.
“The trade was looking for demand destruction, and they got it,” he said.
Chicago Board of Trade December corn dropped 42-1/2 cents to $5.86-1/2 per bushel, while November soybeans fell 62 cents to $13.43 per bushel. CBOT September wheat fell 42-1/4 cents to $8.14-1/4 a bushel.
Earlier weakness was fueled by a fresh 20-year high for the dollar, which makes commodities priced in the currency costlier, and on forecasts suggesting some rain for the U.S. Midwest this week.
Wheat added to losses from Monday on news about talks between Ukraine, Russia, Turkey and the United Nations over Ukraine’s war-disrupted grain exports.
Grain markets also digested the USDA’s weekly crop conditions report late on Monday, which showed lower-than-expected ratings for corn and soybeans.
However, weather forecasts pointing to showers in part of the Midwest this week tempered concern about stress to pollinating corn. (Additional reporting by Christopher Walljasper in Chicago, Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Marguerita Choy)