Corn settles mixed on USDA reports
The USDA said corn supplies as of June 1 totaled 2.76 billion bushels. That marked the lowest level in 16 years and was below analysts' forecast of 2.86 billion bushels in an earlier survey by Dow Jones Newswires. Traders responded by buying nearby futures on worries about tight current corn supplies.
But corn futures for later delivery fell, as the USDA raised its estimate of corn plantings this spring. Corn acreage will total 97.4 million acres, the most since 1936 and up slightly from last year, the USDA said.
The forecast surprised analysts who had expected the cold, wet spring in the Midwest to prompt many farmers to abandon plans to sow corn. Analysts on average had expected the USDA to cut its forecast for corn acreage to 95.3 million acres from the agency's March estimate of 97.3 million acres.
"I thought it was a misprint," said Larry Glenn, an analyst at Frontier Ag, a commodities brokerage in Quinter, Kan. "My first deal was, 'that can't be right'...We're bound to be down some."
U.S. corn futures for July delivery, the front-month contract, settled up 12 cents or 1.8% at $6.79 1/4 a bushel.
December futures, tied to delivery of corn after this fall's harvest, fell 27 1/2 cents or 5.1% to $5.11 a bushel, a one-year low.
Farmers were slow to plant corn in April and early May but began seeding the crop at a record-tying pace starting in mid-May amid warmer temperatures and lighter rain, the USDA said.
The acreage estimate suggests that U.S. corn supplies could increase sharply if summer weather is favorable for the nation's crop. Last year, a severe drought battered the Farm Belt, sending corn prices to a record settlement of $8.3125 a bushel on Aug. 21. But futures have fallen since then due to tepid demand from foreign importers and expectations that the U.S. could produce a record crop this fall.
The acreage figure was based on surveys done in early June, before many farmers had finished seeding their crops--and before many of those who abandoned planting knew they would have to do so. Analysts said the USDA could therefore lower its acreage estimate later in the year.
"The USDA will have to take into consideration the slow pace of planting in subsequent government reports," said Shawn McCambridge, senior grains analyst with Jefferies Bache in Chicago. "In areas inundated with rains, a lot of those acres were either shifted to soybeans" or not seeded at all, he said.
The government also raised its estimate of planted soybean acreage to a record 77.7 million acres this year, up 1% from last year but still shy of expectations. Analysts expected the USDA to estimate this year's domestic soybean plantings at 78.02 million acres, in part on the view that farmers unable to plant corn would switch to soybeans, which have a later growing season.