USDA boosts record corn, soy production Prices fall to session lows before rebounding

The U.S. Agriculture Department has raised its already record-high forecast for corn and soybean harvests, with gains keyed by increased yield estimates in Iowa and other major production states.

The bumper harvest will leave a larger-than-expected stockpile of both commodities even with increased use forecasts, the government said in its final monthly supply and demand and production report.

'This tells us that the corn and soybean markets are not going to run out of supplies any time soon,” said Brian Hoops, analyst at Midwest Marketing Solutions. 'I don't think we should expect any sustained, meaningful rallies.”

USDA pegged U.S. corn production for the 2016/17 marketing year at 15.226 billion bushels, based on an average yield of 175.3 bushels per acre, up from its October outlook of a 15.057 billion bushel harvest and an average yield of 173.4 bushels per acre.

Analysts had been expecting corn production of 15.041 billion bushels and a yield of 173.2 bushels per acre, based on the average forecast in a Reuters survey.

The USDA said the soybean crop would be 4.361 billion bushels, 92 million higher than its October outlook. The government's soybean yield view was raised to an average 52.5 bushels per acre from 51.4 last month.

In Iowa, the USDA increased the average corn yield to 199 bushels per acre, up from 198 bushels per acre on Oct. 1.

The central district at 206 bushels per acre and east central district at 205 bushels per acre are expected to have the highest average corn yields in the state.

Iowa's average soybean yield was raised to 59 bushels per acre from 58 bushels per acre last month. The northwestern district is expected to have the highest average yield in the state at 61.5 bushels per acre.

The USDA did not change its Iowa corn and soybean production forecasts from last month.

The agency unexpectedly raised its 2016/17 corn ending stocks outlook to 2.403 billion bushels, which would be the fifth largest ever, from 2.320 billion bushels on Oct. 1.

The USDA raised its soybean ending stocks forecast to 480 million bushels from 390 million bushels on Oct. 1. If realized, soybean ending stocks would be the third largest on record.

Corn and soybean futures fell to session lows in Chicago after the report was released, with corn hitting its lowest since Oct. 13. Soybeans, which have been underpinned by recent brisk U.S. exports, led a rebound on Thursday as the market turned its attention back towards demand in the run-up to weekly U.S. export sales figures.

Grain investors also saw record U.S. corn and soybean crops as priced in and the focus shifting towards the South American growing season.