By Supunnabul Suwannakij
(Bloomberg) -- Corn futures in Chicago surged to the highest level in two years after the U.S. Department of Agriculture last week cut its supply forecasts. Soybeans and wheat also advanced.
Corn futures for December delivery rose the 45-cent daily limit, or 8.5 percent, to $5.7325 a bushel on the Chicago Board of Trade. That’s the highest level since September 2008. The U.S. Department of Agriculture on Oct. 8 cut its domestic corn- crop estimate for the second time in as many months, predicting a 3.4 percent decline from last year after flooding in June and hot, dry weather in August cut Midwest yields.
“Corn continues to draw strength from the bullish USDA report,” Luke Mathews, commodities strategist at Commonwealth Bank of Australia, said by phone from Sydney. The “USDA expects U.S. corn supply in 2010/2011 to contract to the tightest level in 15 years.”
U.S. corn production will total 12.664 billion bushels, down from 13.16 billion projected a month ago and less than last year’s record 13.11 billion, the USDA said in a report. The average estimate of 26 analysts surveyed by Bloomberg News was for 12.977 billion bushels.
Soybean futures for November delivery gained as much as 4.4 percent to $11.8475 a bushel in Chicago, the highest price since June 5 last year. They traded at $11.7475 a bushel at 9:52 a.m. in Singapore.
Wheat futures for December delivery advanced as much as 2.9 percent to $7.3975 a bushel, before last trading at $7.2975 a bushel.
Unsold U.S. corn supplies on Sept. 1, 2011, before next year’s harvest, will total 902 million bushels, compared with the month-ago forecast of 1.116 billion and 1.708 billion this year, the USDA said. Analysts expect reserves of 1.15 billion bushels.
The U.S. soybean crop will be a record 3.408 billion bushels (92.8 million metric tons), compared with 3.483 billion projected in September and 3.359 billion gathered last year, the USDA said. August rains failed to boost yields, and the government reduced its acreage estimates. Analysts in the Bloomberg survey expected 3.501 billion bushels.
Global wheat stockpiles will total 174.66 million metric tons on May 31, down 1.8 percent from 177.79 million estimated last month, the USDA said. The average estimate of 13 analysts in a Bloomberg News survey was 177.43 million tons.
--Editors: Richard Dobson, Matthew Oakley.
To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at firstname.lastname@example.org
To contact the editor responsible for this story: Richard Dobson at email@example.com