Wheat futures fell on forecasts for a bigger-than-expected U.S. harvest this year despite continuing drought in the Great Plains.
Sizzling temperatures in the northern Plains, where much of the spring wheat crop is grown, won't dent total wheat production as much as expected this year, the U.S. Department of Agriculture said in a monthly report.
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The USDA forecasted wheat production of 1.76 billion bushels in the 2017-18 crop year, down from 2.31 billion bushels in 2016-17 but above what analysts were expecting.
The drought is hurting spring wheat. Production of that key ingredient in high-end baked goods is expected to decline to 423 million bushels from 534 million bushels last year, according to the USDA. But analysts expected a larger cut.
The USDA also surprised analysts by raising its domestic wheat stockpile estimate 2017-18 to 938 million bushels from its June estimate of 924 million.
Soft red winter wheat futures for September delivery at the Chicago Board of Trade fell 2.5% to $5.39 1/4 a bushel after the report. September hard red spring wheat futures were 0.6% lower at $7.92 1/4 a bushel at the Minneapolis Grain Exchange.
Corn futures were lower. The USDA raised its U.S. stockpile estimates for this and next year above pre-report expectations. U.S. farmers will be storing 2.325 billion bushels of corn next year, according to the agency, up from its previous estimate of 2.11 billion.
CBOT September corn futures fell 3.6% to $3.87 1/4 a bushel.
The USDA projected lower-than-expected domestic soybean stockpiles, however, of 460 million bushels next year. CBOT August soybean futures traded 1.6% lower at $10.13 1/2 a bushel.
Erratic weather is stressing corn and soybean crops. Analysts expect the situation to get worse.
The corn and soybean crop "is getting smaller, not bigger," said Joel Karlin, an economist at Western Milling in Goshen, Calif. "These crops have got some major problems."
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(END) Dow Jones Newswires
July 12, 2017 13:30 ET (17:30 GMT)