(Updates prices, adds USDA data; changes byline, dateline, previous PARIS/SINGAPORE)
By Michael Hirtzer
CHICAGO, Sept 12 (Reuters) - Chicago corn futures fell 4 percent on Wednesday, heading for the biggest daily declines in over two years, after the U.S. Department of Agriculture raised its forecast for U.S. production more than analysts expected, traders said.
Wheat futures also tumbled, tracking losses in corn and on pressure from USDA unexpectedly boosting Russia’s wheat harvest outlook. Soybean futures turned higher at midday, despite forecasts for a record-large crop, buoyed in part on news that Washington reached out to Beijing to seek new talks to end the trade war that has hampered U.S. soy shipments to China.
USDA in a monthly supply and demand report predicted U.S. corn output at 14.827 billion bushels, the most in two years and above analyst estimates for 14.351 to 14.607 billion bushels. Average corn yields were estimated at a record 181.3 bushels per acre.
“We got a huge supply shock,” said Price Futures Group analyst Jack Scoville. “Obviously by the market reaction, (traders) were caught by surprise in the corn. I don’t think anyone expected a jump like that.”
CBOT December corn futures eased 15-1/2 cents to $3.51-1/4 per bushel at 12:21 p.m. CDT (1721 GMT), holding just above the life-of-contract low of $3.50-1/4 reached on July 12.
CBOT December wheat fell 18-1/4 cents to $5.00-1/2 per bushel.
USDA increased its forecast for the Russian wheat harvest, when many traders expected lower output amid a European drought that has stoked fears of grain export curbs in both Russia and Ukraine.
“Raising the Russian (wheat) crop 3 million tonnes was certainly a bit of a surprise,” said Dan Cekander, president of DC Analysis. “(USDA) made some of the adjustments the trade was looking for. But I guess the jury is out about when or if there will be Russian export restrictions.”
USDA estimated U.S. soybean output at a record-large 4.693 billion bushels - a forecast that still fell within the range of analyst estimates for 4.523 to 4.781 billion.
CBOT November soybeans were up 2-1/4 cents at $8.34 per bushel, after falling to a contract low of $8.21-1/4.
“The soybeans, people were looking for huge numbers; they got them, but not any bigger than they thought,” Scoville added.
China’s Ministry of Agriculture and Rural Affairs earlier slashed its forecast for 2018/19 soybean imports as farmers reduce their use of the bean in animal feed because of the Sino-U.S. trade conflict. (Additional reporting by Karl Plume in Chicago, Sybille de La Hamaide in Paris and Naveen Thukral in Singapore; Editing by David Evans and James Dalgleish)