Why did corn futures drop significantly after the USDA report?

Corn futures dropped because the USDA unexpectedly raised its forecast for US corn supplies, including record yields and production, contrary to analyst expectations.

What were the USDA's new corn yield predictions?

The USDA raised the average corn yield to 186.5 bushels per acre, a figure higher than analysts had predicted and a new record.

How does the current corn supply compare to previous years?

Farmers are currently holding more corn supplies than last year, partly due to the USDA's revised outlook for increased production and yields.

Home / Business and Economy / Corn Futures Plummet on Surprise USDA Yield Hike

Corn Futures Plummet on Surprise USDA Yield Hike

13 Jan

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Summary

Corn futures experienced their largest drop since June 2023.
USDA unexpectedly raised US corn yield and production forecasts.
Analysts anticipated a reduction in corn supplies, not an increase.

Corn Futures Plummet on Surprise USDA Yield Hike

Corn futures experienced a sharp downturn, marking the most significant drop since June 2023. This decline followed the latest US Department of Agriculture (USDA) supply and demand report, which revised its outlook for American corn supplies upwards. The agency unexpectedly increased its average corn yield and production estimates to new record levels. This news sent corn futures reversing earlier gains, falling as much as 5.8% in Chicago.

The USDA's revised figures indicated larger quarterly and end-of-season stocks than anticipated by market analysts. Many had predicted a reduction in US corn yields due to dry weather late in the growing season. However, the USDA raised the yield to 186.5 bushels per acre, a figure no surveyed analyst had foreseen. This influx of supply exacerbates existing market pressures from substantial global grain harvests and weakened demand.