Governors' Biofuels Coalition

Chicago corn futures fell to the lowest level in nearly a year after the US Department of Agriculture raised its already record-large outlook for the American harvest.

The USDA in a monthly report Tuesday estimated US corn production at 16.742 billion bushels, with a yield of 188.8 bushels per acre, with each surpassing estimates in a Bloomberg survey. That’s after farmers planted more corn acres than a year ago and fields benefited from abundant rainfall and minimal damaging heat.

The harvest “if realized would be the highest production for grain on record for the United States,” the agency said in its report.

Corn futures for December delivery fell by as much as 3.9% to $3.92 a bushel, the lowest since Aug. 29.

While cheaper grain is welcomed by livestock and poultry producers as well as other food makers, the low prices are limiting farmers’ spending power and hitting demand for fertilizer and farm machinery. Shares for some farm suppliers including AGCO Corp. and Nutrien Ltd. eased after the USDA report was released.

“Alarm bells are ringing across rural America following today’s USDA report, and they should be ringing in the halls of Congress,” said Geoff Cooper, president of the trade group Renewable Fuels Association, pointing to a need to raise demand for ethanol to reduce the inventory of corn.

Farmers favored corn this spring in part due to the potential demand risks for soybeans, with the world’s top soy importer China avoiding US crops amid the trade dispute with President Donald Trump.

Soybean futures notched gains of more than 1%, with estimated output of 4.29 billion bushels falling below estimates for 4.374 billion even though yields were seen at a record.

The USDA said the harvested acres for soybeans was lower than its estimate a month ago, while harvested corn acres increased.

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