Corn slammed limit-down by USDA reports
U.S. corn futures fell sharply Thursday after government reports showed higher-than-expected stockpiles and forecast farmers would plant the largest crop seen in more than 75 years.
The U.S. Department of Agriculture said domestic corn stockpiles reached 5.4 billion bushels as of March 1, well above analysts' expectations, in a sign that less than expected was used for animal feed, while last year's harvest may have been larger than originally estimated by the agency.
"The fact that everybody was so completely wrong really suggests that the crop was bigger," said Bryce Knorr at Farm Futures, a trade publication.
Chicago Board of Trade May corn settled down 40 cents, or 5.4%--the maximum daily change allowed by the exchange--at $6.95 1/4 a bushel.The decline sent spot corn futures prices to a one-month low. Although prices remain historically high, they are down 16% from the all-time high set at the height of the U.S. drought in August 2012.
- See how the 'Report Day' trade unfolded in Marketing Talk
- See more on Thursday's big USDA reports
- Also: Big post-report questions
- More: Basis levels
The USDA's quarterly stock reports often drive big moves in futures prices. Three of the previous five quarterly reports also caused the corn market to move higher or lower by the exchange's one-day limit for price moves.
"This sets the undertone of lower prices over the next several quarters, unless unfavorable weather develops," said Terry Reilly, a senior commodity analyst for Futures International, a Chicago brokerage.
Based on the high stocks number and the prospect of a large U.S. corn crop this year, Mr. Reilly on Thursday lowered his price forecast for December corn futures to as low as $4.25 a bushel by late fall, compared with his previous forecast of $5.
December corn, a contract seen as representing new supplies harvested in the fall, settled down 32 1/2 cents, or 5.7%, at $5.38 1/2 a bushel Thursday.
Wheat futures also fell dramatically on higher-than-expected supplies in the USDA report, which traders attributed to weaker demand than anticipated for wheat used in animal feed over the winter. Wheat stocks totaled 1.23 billion bushels at the start of March, 5% above the analysts' consensus of 1.17 billion bushels.
Wheat was also pulled down by the drop in corn. The two grains often trade in tandem since both are used in feed.
CBOT May wheat fell 49 cents, or 6.7%, to $6.87 3/4 a bushel.
Soybeans also fell on greater supplies than expected. The USDA said soybean stockpiles on March 1 totaled 999 million bushels, 5.5% above the average analyst expectation of 947 million bushels.
May soybeans settled down 49 cents, or 3.4%, at $14.04 3/4 a bushel.
The USDA Thursday also issued the results of a survey on farmers' planting intentions for the year. The USDA forecast that farmers will plant 97.3 million acres of corn this year, a small increase from last year and the most planted since 1936.
Farmers are forecast to plant 77.1 million acres with soybeans this year, a small decline from last year, but still the fourth-highest level ever, the USDA said.
The soybean acreage number was markedly lower than the record 78.5 million acres expected by analysts in the Dow Jones poll. The USDA estimate was lower than any of the forecasts made by 21 polled analysts.
As a result, traders Thursday reduced their expectations for U.S. soybean supplies after this year's harvest, and deferred soybean futures fell by less than nearby futures did.
Traders were particularly surprised by the soybean plantings number because surveys of farmers by private analysts usually don't produce such different results than the USDA survey.
"The planting numbers are damn ridiculous," said Tom Leffler, head of Leffler Commodities LLC, an Augusta, Kan., grains brokerage. "What the hell happened here, did everybody lie?"
Wheat planting is expected to total 56.4 million acres this year, a 1% increase from last year.
U.S. grain markets will be closed Friday for a holiday.
-Andrew Johnson Jr. and Ian Berry contributed to this article.
Write to Owen Fletcher at firstname.lastname@example.org
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(END) Dow Jones Newswires
March 28, 2013 15:46 ET (19:46 GMT)
DJ UPDATE: U.S. Corn Settles Limit Down on High Supplies in Government Reports->copyright
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