Corn futures fell by the most since June 2023 after the US Department of Agriculture raised its outlook for American supplies when analysts were expecting a cut.

The agency in its monthly supply and demand report boosted the average corn yield and production to fresh records while quarterly and end-of-season stocks also came in bigger than anticipated.

Corn futures reversed earlier gains to drop as much as 5.8% in Chicago.

The added supply comes as markets were already struggling against big global grain and oilseed harvests, and demand that’s been interrupted by geopolitics from US President Donald Trump’s dispute with China to fresh attacks in Russia’s war with Ukraine.

Many analysts had expected the USDA to cut the US corn yield for months after weather turned dry at the end of the growing season. The agency instead raised the yield to 186.5 bushels per acre, from 186.0 previously. None of the more than 20 analysts surveyed by Bloomberg expected a hike.

“The risk for the market was that no one was looking for larger yield in the corn, and that’s what we got,” said Charlie Sernatinger, head of grain futures at Marex. The report was “bearish on all fronts.”

Strong corn demand has been a relative bright spot for US farmers for more than a year, enticing them last spring to boost plantings at the expense of crops like soy. Overall favorable weather had yields up across the majority of the Corn Belt, with record highs in states including Indiana, Nebraska, Minnesota and the Dakotas.

Farmers now are sitting on more supplies than last year as another planting season approaches. The USDA recently rolled out a $12 billion aid package for farmers as a “bridge” to get to better economic times.

One fix would be to raise the amount of corn-based ethanol that gets mixed into US gasoline, according to the Renewable Fuels Association.

“Today’s surprise USDA report serves as a sobering wake-up call about the state of farm economy and underscores the need for lawmakers to take immediate action to expand markets for America’s corn growers,” RFA Chief Executive Officer Geoff Cooper said in a statement.

Meanwhile in soybeans, the agency reduced its outlook for American bean exports, citing increased production and exports for Brazil, the world’s top producer. That’s despite China nearing completion of a goal to purchase 12 million tons of US soybeans.

With assistance from Dominic Carey and Eleanor Thornber.

This article was generated from an automated news agency feed without modifications to text.