July 10, 2020 / 5:33 PM / a month ago

UPDATE 1-U.S. lowers wheat, corn harvest forecasts as farmers cut acreage

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By Mark Weinraub

CHICAGO, July 10 (Reuters) - The U.S. government lowered its forecasts for domestic corn and wheat harvests on Thursday due to a cut in acreage estimates, but yields were still expected to remain robust due to good crop weather.

The U.S. Agriculture Department’s 2020/21 wheat production outlook for 1.824 billion bushels was 2.8% below its June forecast and near the low end of market expectations. The cut sparked a rally in wheat futures, which jumped to their highest since April 24 after the data was released.

USDA pegged average wheat yields at 49.7 bushels per acre, down 0.1 bushels from its June estimate and the third largest on record if realized. U.S. farmers are about halfway through the harvest of the winter wheat they seeded last fall.

“Traders may have been caught off guard by winter wheat production declining as much as it did, but a lot of that is reflected in the acreage,” said Terry Reilly, senior commodity analyst for Futures International.

Corn production for the 2020/21 marketing year was pegged at 15.000 billion bushels, based on a yield of 178.5 bushels per acre, USDA said in its monthly supply and demand report. That compares with the government’s June estimate of a 15.995 billion bushel harvest and yields of 178.5 bushels per acre.

Corn futures, which had been trading lower before the report was released, sank 3% to a 10-day low.

“If the weather forecasts are fine, and the market doesn’t see a threat to yields, there’s probably too much weather premium in,” said Craig Turner of Daniels Trading. “The USDA’s not going to update any kind of yield projections until a month from now.”

Soybean production was seen at 4.135 billion bushels, up from the June outlook for 4.125 billion bushels. Average yield expectations were unchanged at 49.8 bushels per acre. (Reporting by Mark Weinraub; Editing by Kevin Liffey)

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