(Bloomberg) -- Corn surged the most in three months after the US Department of Agriculture surprised traders with a bigger-than-expected cut to yield and production of America’s most widely grown crop.
While a small trim in USDA’s monthly supply and demand outlook was anticipated, the scale of the reduction caught traders off guard, with futures in Chicago rising by as much as 3.7% after the report was published.
Farmers have been complaining about the accuracy of the agency’s reports — and also replying less to surveys that are used by the USDA to produce the data. Tuesday’s report is the third time to spark increased volatility since the end of September. Such turbulence in USDA reports has prompted efforts at the agency to modernize.
The USDA pared back yields in key corn-growing states including Illinois, Indiana and Nebraska, estimating national production at 15.893 billion bushels. That’s down from an October outlook and below an estimate in a Bloomberg survey. The numbers are a reversal from recent reports that showed unexpectedly large stockpiles, such as one last month that sent prices tumbling.
“The market finally got its production cut,” said Giovana Cavalca, grains research analyst at Amius.