CBOT corn futures dump 6% to hit limits as US braces for big crop

Corn futures on the Chicago Board of Trade hit their limits across all five of the nearest futures contracts, as a much-anticipated update on the state of the country’s corn harvest caught many off-guard on Monday.

Despite expectations corn area would be slashed after atrocious weather across key growing regions, the cut was smaller than expected and came shackled to a surprise boost in yields that few had seen coming.

At 169.5 bushels per acre, on 82 million harvested acres, the US corn crop was estimated at 13.9 billion bushels (353 million mt), immediately sending the front month corn future into a tailspin as it lost 25 cents in a matter of seconds.

At one point, September and December 2019, March, May and July 2020 had all hit the 25-cent limit down stop, with September falling to almost $3.85/bu from just over $4.10/bu.

The move underlines yet again the variables that are complicating the outlook for the 2019/20 US corn crop, after heavy rain drove farmers to plant late, raising fears for the total acreage planted and the potential yield it would deliver.

“The signs were all there that we wouldn’t find the bullish confirmation of lower production in this report – you need to see combines roll before that happens,” Kelly Herrick of Advance Trading said.

Just hours before the USDA’s release, data from satellite-based analysts Indigo had predicted a yield of 154.7 bpa, on 85.4 million acres, delivering a harvest of 12 billion bushels (304.8 million mt).

“That’s the problem with these hybrid yield models – especially around Wasde reports. Is Wasde forecasting what final yields will be, or what it looks like now?” he said.

“No one (expected the figures) … It goes to show that crop conditions were a little more accurate than people thought,” Terry Reilly of Futures International told Agricensus.