Soybean futures had their biggest drop in 18 months after the government said US farmers harvested a larger crop than expected.
The US Department of Agriculture raised the estimate of last year's harvest by 1.5 percent to 2.73 billion bushels partly on increased production in Iowa and Minnesota, which escaped the drought conditions that reduced crops in other growing states. The government also boosted its estimate of the surplus of unsold beans on Aug. 31 by 8.6 percent from December.
"We had 400,000 acres more soybeans harvested" than the government estimated in December, said Eugene Graner, a grain broker at Heartland Investor Services in Bismarck, North Dakota.
"Yields were better in Iowa because they had pretty fair weather."
Soybeans for March delivery fell US$0.23, or 4 percent, to US$5.5675 on the Chicago Board of Trade, the lowest closing price since Dec. 18 and the biggest one-day percentage decline since July 2001. Soybean futures still are up 29 percent from a year ago, after drought reduced the 2002 crop by 5.5 percent from the previous year.
"This is not much of a friendly report" for grain prices, said Dick Loewy, president of Doane Agricultural Services Co in St. Louis, before trading began. "Across the board, we gained stockpiles."
The larger-than-expected soybean crop will leave the unsold surplus at 190 million bushels, compared with 175 million estimated in December, the government said.
Corn prices fell to a 6-month low after the government raised its estimate for the corn surplus by 9.6 percent from a month ago.
Corn for March delivery fell US$0.875, or 3.6 percent to US$2.3475 a bushel in Chicago, the lowest closing price since July 12. Prices still are up 12 percent from a year ago, because the 2002 crop the government has estimated would be the smallest in seven years.
The export forecast was cut by 2.6 percent to 1.85 billion bushels, because of increased competition from China.
In addition, overseas demand for US wheat "has been pretty awful," because larger crops in the European Union, Russia and Ukraine "are holding our exports in check," said Marty Foreman, a grain analysts at Doane Agricultural Services.
Wheat for March delivery fell US$0.975, or 3 percent, to US$3.1925 a bushel, the lowest close since July 8. Futures still are up 5.2 percent from a year ago, because the total wheat crop last year was the smallest in three decades.
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