Corn prices surged by the most in three months after the US Department of Agriculture (USDA) slashed its yield and production estimates for America’s top crop. The agency’s monthly report revealed a larger-than-expected reduction, catching traders off guard and driving futures in Chicago up by as much as 3.7%. Farmers have criticized the accuracy of USDA reports and have been less responsive to surveys used to compile the data, contributing to recent volatility.
The USDA lowered its production estimate to 15.893 billion bushels, a drop from its October forecast and below market expectations. This reversal comes after recent reports had indicated unexpectedly large stockpiles, which had previously sent prices tumbling. Analysts noted that the market had been anticipating a production cut, with Giovana Cavalca of Amius calling it a long-awaited adjustment.
Meanwhile, soybean production was revised upward to a record high of 4.57 billion bushels, with futures rising by as much as 3.6%. The USDA also increased its estimate for American soybean exports, citing larger supplies and strong early-season demand. China, the top global buyer, is on track to meet its annual purchase commitment of 25 million tons of US soybeans, though existing tariffs continue to divert most supplies into government reserves.
The American Soybean Association expressed concern over the 10% tariff on US soy imports, which gives South American competitors an advantage in the Chinese market. The group urged the Trump administration to seek a long-term arrangement to restore US soybeans to China’s commercial market. Shares of farm machinery makers Deere & Co. and AGCO Corp. briefly rose following the report, reflecting potential gains for the agricultural sector.