The Department of Agriculture cut its forecast for U.S. soybean yields and production in its monthly crop report rolled out Monday, catching the market by surprise and sending futures prices higher.

“It’s bullish, there’s no doubt about it,” said Jack Scoville, a vice president of the Price Futures Group said.

The Chicago Board of Trade November contract for soybeans was up 70 cents about an hour after the report was released; the December contract for corn was up about 10 cents.

Market watchers were generally expecting a bump in USDA’s soybean yield forecast, Scoville said, but the department lowered its prediction for the 2022-23 marketing year crop to 50.5 bushels per acre, down from the August forecast of 51.9 bushels per acre.

With lower yield expectations, USDA lowered its production forecast to 4.378 billion bushels in the latest World Agricultural Supply and Demand Estimates report. That’s a drop from USDA's prediction last month of 4.531 billion bushels. It’s also below the estimate for last year’s crop, which totaled 4.435 billion bushels.

Small cuts in the demand side of the soybean equation did not offset a reduction on the supply side, and the department lowered its prediction for the carryout to just 200 million bushels, down from the August forecast of 245 million.

Corn yields and production were both cut for the 2022-23 marketing year, but those were generally expected and had less impact on the futures market, Scoville said.

USDA cut its corn yield forecast to 172.5 bushels per acre, down from the WASDE estimate of 175.4 bushels in August. American farmers are now forecast to produce 13.944 billion bushels this year. That’s down from the August prediction of 14.359 billion bushels and last year’s production of 15.115 billion.

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The USDA lowered its forecast for the average farm price for all wheat, but otherwise made no changes to supply and demand factors in the U.S.

The major changes for wheat came in the global predictions, including a record forecast for Russian production.

Global wheat supplies, USDA said in the September WASDE, are now expected to reach about 1.06 billion metric tons “as production increases for Russia and Ukraine more than offset a decline in beginning stocks. Production in Russia is forecast 3 million tons higher, to 91 million, on harvest results for winter wheat to date published by the Russian Ministry of Agriculture. If realized, area harvested, yield, and production for Russia will all reach record highs.”

USDA also trimmed the outlook for rice supplies, domestic use, exports and ending stocks. If realized, it would represent the lowest U.S. rice production since the 1993-1994 marketing year, the report noted. 

Cotton ending stocks, production and exports were all raised; global production was boosted by 1.4 million bales "as more production in the United States, Australia, China and Turkey offset decreases for Pakistan, Uzbekistan and Togo." 

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