Corn and wheat prices fell after a government report forecast higher agricultural plantings and production than anticipated.
The U.S. Agriculture Department estimated in a monthly report that 90 million acres of corn were planted by farmers this year—greater than market expectations, traders said.
Corn futures for December delivery fell on Monday by 6%, dropping below $4 a bushel for the first time since May. November soybeans declined 1.4%, while September wheat lost 5.6%.
The market reaction was similar to the one in June, when another USDA report also estimated higher corn acreage than the level expected in the market. Traders had bet that flooding and record rainfall in the Corn Belt throughout the spring would weaken acreage.
“The trade once again got it wrong, ” said Terry Reilly, senior commodities analyst with Futures International.
The report detailed big adjustments from projections in July. This month’s forecast places corn production in the 2019-2020 year at 13.901 billion bushels, up from July’s estimate of 13.875 billion bushels. Corn yields will be 169.5 bushels per acres, up from 166 bushels for acres in July, the report said.
Meanwhile, soybean production was projected to be 3.68 billion bushels, down from 3.845 billion bushels last month.
For some in the market, Monday’s report showed how farmers planted corn acres in June despite unfavorable weather conditions in an effort to be eligible for aid payments from the USDA.
The USDA confirmed in late July that it would deploy $16 billion in government funds to aid farmers hurt by the trade conflict.
Payment rates will range between $15 and $150 an acre, the USDA said, based on a farm’s location and this year’s expected production.
The report “confirms to me that the USDA market-facilitation payments kept guys on a tractor longer” than they otherwise would have been, said Dave Marshall, farm-marketing adviser at First Choice Commodities.
Mr. Marshall also said that a decrease in soybean acres supports this theory, in that the U.S.-China trade tensions would have spooked farmers enough to keep them planting corn. China is a crucial consumer of U.S. soybeans, making corn more immune to ramifications from the ongoing trade war.
Wheat, which has been less affected by weather, is expected to show higher production at 1.98 billion bushels, up from 1.921 billion bushels last month, according to the report Monday.
Globally, the USDA expects a smaller wheat crop of 768.1 million tons, down from 771.5 million tons in the July report.
Write to Kirk Maltais at Kirk.Maltais@wsj.com
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