Soybean bulls got a surprise boost after a U.S. report signaled a smaller U.S. harvest. 

The U.S. Department of Agriculture cut estimates for soybean yields and reserves in its November World Agricultural Supply and Demand Estimates, or WASDE. The prospect of shrinking supplies adds to other bullish factors, with American farmers facing an onslaught of higher costs and ongoing supply-chain headaches. Surveys ahead of the report, however, had pointed to bigger supplies.

“Everything was exactly the opposite of what the trade was expecting,” said Jack Scoville, vice president of Price Futures Group Inc. in Chicago.

It’s been a volatile year for grain markets. Surging fertilizer prices, uncertainty around China’s demand and inflation around the globe could keep crop prices volatile despite an outlook for big soybean and corn harvests next year. 

In general, soybean crops have been resilient, weathering everything from drought to floods in the U.S., the second biggest producer. Previously, expectations were for bigger production.

Global food prices have been increasing, and soy supplies are a key factor in whether that will continue. The beans are used as feed for animals raised for meat.

A United Nations index tracking staples from grains to vegetable oils climbed 3% to a fresh decade high in October, threatening even higher grocery bills for households that have already been strained by the pandemic. 

Not everything in the report was bullish.

“Even with the lower yields, the government is still sending a signal that our demand is getting a little less and our ending stocks are getting a little bigger,” said Don Roose, president of U.S. Commodities.

Soy for January delivery rising as much as 4.4%, and trading 2.3% higher at $12.155 a bushel as of 11:34 a.m. In Chicago.

For wheat, the USDA ratcheted up its global trade figure to 203.2 million tons, an all-time high. 

Wheat soared last week, with futures in Paris hitting a record and those in the U.S. jumping to the highest levels in a decade or more. Weather woes in key growing areas have led to a shortage of grains, driving up prices of wheat used in baked goods and livestock feed. 

The prospect of lingering supply issues next year boosts the chances wheat prices will continue surging.