Corn futures jumped the most in a month after the U.S. government reduced its forecast for domestic production, citing lower yields after excessive rain across parts of the Midwest.
This year’s harvest will be 13.585 billion bushels, the U.S. Department of Agriculture said Friday, down from its August estimate of 13.686 billion bushels.
While the latest projection is higher than the 13.484 billion-bushel average of 33 analysts surveyed by Bloomberg News, it still reflects the impact of record-high amounts of rain in Illinois, Indiana and Ohio in June.
“Today’s cut in corn yields is the beginning of further reductions,” Steve Nicholson, a vice president of food and agriculture research at Rabo AgriFinance Inc. in St. Louis, said in a telephone interview. The USDA “is beginning to recognize the damage earlier wet weather did to the crop. Supply is tightening up and will get smaller.”
Corn futures for December delivery rose 3.4 percent to close at $3.87 a bushel on the Chicago Board of Trade, the biggest gain for a most-active contract since Aug. 10. Earlier, the price touched $3.875, the highest since Aug. 12.
Rice futures for November delivery advanced 1.3 percent to $12.83 per 100 pounds after reaching $12.90, the highest in almost a year. This week, the grain jumped 5.9 percent, the most since October 2011. The USDA cut the forecast for this year’s domestic crop by 7.6 percent from August.
Wheat futures for December delivery rose 1.5 percent to $4.85 a bushel after reaching $4.855, the highest since Sept. 2. This week, the grain climbed 3.7 percent, the most in two months.
Corn yield forecasts were reduced in states including Iowa, Minnesota, Indiana and South Dakota, according to the USDA. The estimate for Illinois, the second-largest U.S. grower, was raised.
Corn production last year rose to a record 14.216 billion bushels. The grain is the biggest U.S. crop.
U.S. corn reserves on Aug. 31, the end of the marketing year, will be 1.592 billion bushels, the USDA said, compared with the August estimate of 1.713 billion. Analysts expected 1.609 billion.
The government reduced its forecast for world inventories to 189.69 million metric tons from 195.09 million tons last month. That’s lower than the 193.32 million forecast by analysts and would mark the first reduction in global stockpiles in five years.
Inventory estimates were reduced for the European Union and Brazil.
Smaller corn supplies can boost costs for ethanol refiners, which buy the grain to make fuel. Meat producers use the grain in livestock feed. The U.S. is the world’s largest grower.