The shrinkage, announced in the latest World Agricultural Supply and Demand Estimates (WASDE) report, were bigger than investors had expected, according to Refinitiv.
The US Department of Agriculture (USDA) reduced its estimates for the US corn crop by 1.8 Mt to 382.6 Mt, and for the US soybean crop by 1.1 Mt to 111.7 Mt.
Short covering by speculative traders may also have added to the price rises, remarked AHDB senior analyst, cereals and oilseeds, Helen Plant.
“Recently speculative traders have held large short positions in the Chicago wheat and maize [corn] futures, and a nearly neutral position in Chicago soybean futures. Refinitiv reported notable buying across the commodities by speculative traders yesterday.”
The USDA’s revision to US corn output reflects a bigger-than-expected reduction in the yield estimate, of 0.05t/ha to 10.86t/ha, taking it below last year’s 10.86t/ha result, reported CRM Agri.
Feed demand forecast
The agency also trimmed its estimate for US feed demand for corn.
Speaking to this publication earlier in October, Arlan Suderman, chief commodities economist at the StoneX group, outlined how a reduced breeding herd had weakened US cattle feed demand. "Right now, we're kind of in an oversupply situation relative to demand."
In terms of the US soybean output, the WASDE downgraded yield estimates by 0.04t/ha to 3.33t/ha, reducing it to the same as last year’s outcome, with the USDA adding that “the largest production changes are for Kansas, Michigan, and Nebraska.”
The USDA also raised by 1.0Mt its estimates for Chinese soybean consumption both in 2022/23 and 2023/24, reported the CRM Agri analysts.