Wheat futures jumped to a three-month high after the US downgraded its harvest estimate by far more than investors had expected, while corn futures found support from a lower-than-expected inventory figure.
Chicago soft red winter wheat futures, the world benchmark, closed up 2.8% at $9.21 ½ a bushel for December, achieving their highest finish for the third quarter on the last day of the period.
The contract also closed above its 200-day moving average for the first time in nearly three months,
The gain, which took to 24% the contract’s recovery from a mid-August low, was spurred by a downgrade of 130m bushels (3.6m tonnes) to 1.65bn bushels (44.9m tonnes) in the official estimate of the 2022 US all-wheat harvest.
The revision – which far exceeded the downgrade of 5m bushels that investors had expected – reduced to just 3.6m bushels, or less than 100,000 tonnes, the growth in US wheat production this year.
‘Tendency to surprise’
Corn futures, meanwhile, closed up 1.2% at $6.77 ½ a bushel, after earlier posting gains of 4.0%, after the US Department of Agriculture, in a separate briefing, estimated domestic stocks of the grain as of the start of this month – and the end of 2021-22 – at 1.38bn bushels.
While up 142m bushels year on year, the stocks total fell well short of the 1.53bn-bushel number that the USDA pencilled in earlier this month, besides the 1.51bn-bushel figure that investors had expected.
However, soybean futures plunged by 3.3% to $13.64 ¾ a bushel for November, an eight-month closing low for a spot contract, after the USDA pegged domestic inventories of the oilseed as of the start of this month, and the end of 2021-22, at 274m bushels.
That was above the 257m-bushel figure that the USDA had been utilising, and the 242m-bushel number that the market had expected.
“The tendency for USDA to surprise the trade at the end of September lives on,” said Terry Reilly at Futures International, with the month’s stocks and wheat output reports having a historical record of causing grain price volatility.
The downgrade to the US wheat harvest estimates reflected weakened expectations for production of both spring- and winter-crop output.
The estimate for the hard red winter wheat harvest was cut by 45m bushels to 531m bushels – a drop of 29% year on year to the lowest on data going back to 1984-85.
For soft red winter wheat, the harvest estimate was cut by 44m bushels to 337m bushels, taking it below last year’s total.
Spring wheat revisions
Among the spring wheat classes, the durum harvest estimate was trimmed by 10m bushels to 64m bushels, with the figure for other spring wheat downgraded by 30m bushels to 482m bushels – although still representing a recovery from last year’s drought-reduced 297m bushel crop.
In all cases, the estimates fell well below market expectations.
Hard red winter wheat futures for December finished up 2.6% at $9.91 ½ a bushel, a three-month closing high for a spot contract.
Minneapolis spring wheat for December settled up 1.7% at $9.82 a bushel, also a three-month closing high.