By Kirk Maltais
The U.S. will produce less corn and soybeans than previously anticipated, with a smaller area of land harvested than expected, according to the Agriculture Department.
In its latest world supply and demand report, the USDA cut its estimate for the domestic corn crop to 13.73 billion bushels, and its outlook for soybean production to 4.28 billion bushels.
These estimates are less than what analysts surveyed by The Wall Street Journal had projected. The survey put the corn production estimate at 13.92 billion bushels and soybeans at 4.36 billion bushels.
Traders say that the cut to harvested acres by the USDA was unexpected.
Meanwhile, the USDA's latest quarterly stocks report showed less corn, soybeans and wheat on hand than expected by analysts. Corn stocks as of Dec. 1 were 10.8 billion bushels, soybeans were at 3.02 billion bushels and wheat was 1.28 billion bushels. All three are down from the same time the prior year.
"The stocks in all positions were uniformly bullish," says Charlie Sernatinger of Marex in a note following the report's release.
The combination of both reports has slightly tightened the balance sheet for grains to start the year. But traders are likely to stay cautious and wait for more data from the South American harvest before making big moves, Albert Chu of Newton Investment Management told The Wall Street Journal.
"We're not running bare at the grocery store, but this is tight," said Mr. Chu. "At this point in the season, we're not running out of stuff -- but in the coming months, a lot of things can change."
Following the USDA's data release, grain futures on the CBOT have surged. Most-active corn futures are up 2.1%, soybean futures are up 1.7% and wheat futures are up 0.4%.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
01-12-23 1350ET
