Corn, wheat, oats, and soybeans collapsed on Thursday after a USDA forecast for larger-than-expected crops this year. Dry weather in the Midwest had many market watchers fearing significant crop losses, but the USDA projected bumper crops.
The USDA increased the size of the soybean crop to a record 4.381 billion bushels and forecast the corn crop size at 15.2 billion, a near record.
This news sent the grain markets in a downward spiral, with soybean and wheat prices reaching six-week lows. Meanwhile, the value of this fall’s corn crop collapsed to an 11-month low near $3.70 per bushel.
Many producers and investors are skeptical that the final harvests will match the USDA’s current outlook, which could result in a rally in the coming months if the crops end up being smaller. For now, the price reflects a large surplus of grain and another tough year for farmers who didn’t hedge during the past few months when prices were higher.