US grain prices fell on Thursday and will remain under pressure through winter as the government confirmed on Thursday trade expectations for near-record corn and soybean harvests in the United States this year, analysts said.
"Everything in the world is bearish. Looking at all the numbers, absolutely none of them came out less than expected," said Charlie Sernatinger, an analyst for Chicago trade house O'Connor and Co.
Chicago Board of Trade soybean futures closed 1 to 4 cents per bushel lower Thursday, with bellwether new-crop November down 1-1/4 at $5.77 per bushel. Corn futures closed 3/4 to 2 cents per bushel lower, with active new-crop December down 1-1/2 at $1.93-3/4 per bushel.
The US Agriculture Department forecast US corn output at 11.032 billion bushels this year. That's above an average of analysts' estimates for 10.975 billion and below last year's bin-busting 11.8 billion, which was produced amid near-greenhouse weather conditions throughout the Midwest.
The bumper crops this year come despite a severe drought in Illinois, a leading producer of both corn and soybeans.
USDA said US soybean output this year will total 3.043 billion bushels. The soy production also was above analysts' estimates for 3.024 billion and just behind last year's record crop of 3.124 billion.
Traders and analysts were a bit cautious about whether prices would go much lower now, because the markets already have been tumbling this fall, with corn ratcheting down to new contract lows on expectations that "big crops will be getting bigger."
"The thing I would caution is that everybody is leaning on the same side of the boat," Sernatinger said.
Anne Frick, an oilseed analyst with Prudential Securities, also indicated the huge crop size already may have been factored into the futures markets.
"I didn't think it was any big surprise at all. It was very close to the private estimates at the high of the range, but within the range of expectations," Frick said.
"We have big supplies and we knew that," she added.
USDA also boosted its estimate for marketing year 2005/06 US corn ending stocks, to 2.319 billion bushels from the October outlook for 2.220 billion.
"Ending stocks are up at a burdensome level, when you're talking about 2.319 billion bushels," said Don Roose, president of US Commodities, Des Moines, Iowa. "Next year, people are going to be respectful that we can grow a crop, a sizeable crop, under some adverse conditions," he said.
The government also raised its estimate for US soy ending stocks to 350 million from the previous 260 million.
"Without a South American problem, the market is going to continue to struggle throughout the next year just because we have big stocks of soybeans," Roose said.
USDA pegged Brazil's soy crop for 2005/06 at 58.5 million tonnes, below its forecast in October for 60.0 million but well above last year's output of 51.0 million.