Corn futures rallied to the highest levels since late June and soybean futures jumped to four-week highs after USDA lowered its estimates for this year’s U.S. harvest much more than analysts expected. But price gains tempered to some extent by an ongoing outlook for heavy global supplies.

In its Crop Production update, USDA cut its estimate for the U.S. corn crop to 15.143 billion bushels, down 60 million bushels from an October forecast and far more than the roughly 14 mbu reduction analysts expected. The average estimated nationwide yield also shrank more than expected, dropping to 183.1 bushels per acre from 183.8 bpa.

For soybeans, USDA slashed its production forecast to 4.461 bbu from 4.582 bbu in October. Analysts expected a more modest reduction of about 25 mbu. The average estimated yield dropped to 51.7 bpa from 53.1 bpa. USDA’s estimated crop would still be up 7.2% from last year but would no longer be the record many expected earlier this year. With USDA's downward revision, this year's U.S. soybean crop now ranks No. 2 overall, 3,182 bushels under the 2021 record.

USDA's lower-than-expected numbers indicated that prolonged dry conditions across the Midwest late last summer curbed yields. That fueled ideas corn and soybean supplies, while still abundant, may not be as burdensome as once thought. In a separate report today, USDA's monthly Supply and Demand update included reduced forecasts for corn and soybean stockpiles at the end of the 2024/25 marketing year.

Related:Weekly Grain Movement: Soybeans lead the charge - Dec. 9, 2024

Still, this fall’s abundant U.S. harvest will contribute to swelling global grain supplies that are likely to weigh on the market well into 2025.

"When you look at it overall, late August, September moisture levels were just too low” in the Midwest, U.S. commodities president Don Roose told Reuters. “Overall, we still have adequate supplies, but I think we're just balancing back here."

Near the close of trading, December corn futures were up 3.75 cents at $4.3125, after earlier jumping to $4.3475, the contract’s highest intraday price since June 28. January soybeans were up 4.75 cents at $10.31 after briefly touching $10.44, the highest intraday price since October 9.

Wheat futures sustained earlier losses after USDA slightly boosted its estimate for U.S. wheat supplies at the end of the 2024/25 crop year. December wheat was up 0.5 cent at $5.72.

The following are brief summaries based on the Crop Production and Supply and Demand reports:

Corn

In its Supply and Demand report, USDA lowered its estimate for U.S. corn supplies at the end of the 2024/25 marketing year next August to 1.938 bbu, down 61 mbu, or 3.1%, from the October forecast. Ending stocks would still be up 10% from 2023/24.

Related:Export Report: Corn sales exceed expectations

Projected U.S. exports in 2024/25 were held unchanged at 2.325 billion bushels, up 1.4% from 2024/24. Total use was also unchanged.

Further fodder for market bulls was found in the global balance sheet for corn. USDA trimmed its forecast for global corn stockpiles at the end of 2024/25 by 0.8% to 304.14 million metric tons. Among top producing countries, estimated 2025 corn production from Argentina and Brazil was unchanged.

Soybeans

Market bulls had to be encouraged by USDA’s sharp cut in expected U.S. soybean supplies next year. The USDA dropped its forecast for soybean stockpiles at the end of 2024/25 to 470 mbu, a 15% reduction from the October projection. The updated forecast would still be up 37% from 2023/24 ending stocks.

However, USDA also reduced its forecast for soybean exports to 1.825 bbu from 1.85 bbu and reduced expected crushings to 2.41 bbu from 2.425 bbu.

On the global front, ending soybean stocks for 2024/25 were lowered to 131.74 MMT from 134.65 MMT. USDA held its Argentina and Brazil soybean harvest forecasts unchanged at 51 MMT and 169 MMT, respectively.

Related:USDA exports – China buys soybeans, Dec. 5, 2024

Wheat

Supply and Demand numbers for the wheat market were a mixed bag. USDA slightly hiked its 2024/25 ending stocks figure for U.S. wheat to 815 mbu, up 3 mbu from an October estimate. Expected exports were unchanged at 825 mbu.

The outlook for global wheat supplies next year appears to be tightening. USDA lowered estimated global wheat stocks at the end of 2024/25 to 257.57 MMT from 257.72 MMT, a slightly smaller than expected reduction. Global supplies are still expected to shrink to a nine-year low.