Domestic supplies of corn and soybeans will be tighter than expected in the United States as problems with crops in Brazil and Argentina have raised demand for U.S. supplies from overseas buyers, the U.S. Agriculture Department said on Friday.
In its monthly supply and demand report, the government cut its new-crop and old-crop ending stocks outlooks for both corn and soybeans by more than analysts had forecast.
Concerns about the crops in South America have pushed corn and soybean futures up sharply during the past two months despite a speedy planting season in the U.S. Midwest. Soybean futures peaked at their highest in nearly two years during the rally while corn jumped to its highest since July 2015.
For corn, USDA said U.S. ending stocks for 2015/16 would be 1.708 billion bushels, down from its May outlook for 1.803 billion bushels. It lowered its 2016/17 corn end stocks view to 2.008 billion bushels from 2.153 billion bushels.
Analysts had been expecting old-crop corn stocks of 1.772 billion bushels and new-crop stocks of 2.125 billion bushels, based on the average of estimates in a Reuters poll.
Old-crop soybean stocks were cut to 370 million bushels from 400 million bushels. New-crop soy stocks were lowered to 260 million bushels from 305 million bushels. That compares with analysts' forecasts of 385 million bushels for old-crop and 289 million bushels for new-crop.
USDA trimmed its 2015/16 Brazil corn harvest outlook by 3.5 million tonnes to 77.50 million tonnes and its Brazil soy harvest outlook by 2 million tonnes to 97 million tonnes, reflecting dryness in key growing areas. The cuts outstripped market forecasts.
It left its estimate of Argentine 2015/16 crops unchanged, at 27 million tonnes for corn and 56.5 million tonnes for soybeans, but said that harvest delays there have helped the U.S. export program.
Wheat supplies are expected to rise to a 29-year high even as the balance sheet for corn and soybeans tightens.
USDA pegged 2016/17 U.S. wheat ending stocks at 1.050 billion, up from its May outlook of 1.029 billion bushels, due to a record winter wheat yield of 50.5 bushels per acre. The government raised its winter wheat production forecast to 1.507 billion bushels, with bigger harvests expected in key states such as Kansas, Oklahoma and Texas.
Old-crop wheat ending stocks were raised to 980 million bushels from 978 million.