US soybean futures dropped 1.6 percent to their lowest level in more than four months on Friday after the US government's latest forecast of this year's crop topped expectations, traders said. Wheat also fell sharply, breaking a streak of four positive sessions, as the US Agriculture Department surprisingly boosted its global and domestic supply estimate despite reports of poor weather in key growing areas such as the US Plains, Australia and Argentina.
Corn futures were only slightly weaker. USDA forecast soybean production at 2.971 billion bushels, up from its October estimate of 2.86 billion and above analysts expectations for 2.892 billion. The new yield forecast of 39.3 bushels per acre, up from 37.8 in October, bested the market consensus of 38.164 bushels per acre.
The change in the yield forecast, a record for the November report, shocked the market as a fast harvest showed that the damage from the worst Midwest drought in more than 50 years was not as bad as feared. "Soybeans are taking the hit right now. The yield jump came off as a little bit of a surprise here," said Karl Setzer, a commodity trading adviser at MaxYield Co-operative. "It is more of a knee jerk reaction." At 8:20 am CST (1420 GMT), Chicago Board of Trade January soybean futures were down 24-1/4 cents at $14.71-1/2 a bushel. The front-month contract traded as low as $14.68-3/4, its lowest level since June 29.