Sharp fall in US corn stocks revives grain prices
(AgriMoney) – Grain prices rebounded strongly after the US said that its corn stocks fell last season more steeply than investors had expected, in a report which maintained its knack for surprises.
The US Department of Agriculture, in a much-anticipated report on crop inventories at the start of this month, pegged corn stocks at 988m bushels (25.1m tonnes), a decline of 12.1% year on year.
The figure for a date which marked the close of the 2011-12 crop year also represented the lowest carryout for eight years, and was 125m bushels short of the figure that analysts had forecast.
The decline was led by inventories held beyond producers, at sites such as elevators or ports, stocks on farm steady year on year.
The impact on prices was to send Chicago’s December corn futures contract – which had earlier dropped to its lowest for more than two months -back into positive territory, with a swing of 4%.
The rebound revived prices of fellow grain wheat too, which recovered from levels marginally above its two-month low to 2% post gains.
Many investors had prepared for a large corn stocks figure which, in indicating more generous supplies, would have been viewed as negative for prices.
Indeed, the USDA’s previous two September 1 inventory report had found more corn than investors expected, prompting sharp price drops.
The prospect of the department again turning up larger stocks than forecast was seen as a big factor fuelling corn’s recent price pullback from last month’s record high.
Nonetheless, the report did maintain its reputation for surprises, but this time in soybeans, for which the inventory number at the start of the month, which also marks the change of marketing years for the oilseed, standing at 169m bushels.
While down 21% year on year, investors had expected a sharper drop, thanks to strong demand for the crop from both domestic and foreign investors, spurred by the dearth of alternative supplies following drought hits to South American crops at the start of this year.
However, the USDA said that its production last year had been underestimated, thanks to higher sowings than had been thought, a lower crop abandonment rate and a bigger yield than thought too.
The 2011 harvest was pegged at 3.094bn bushels, some 38m bushels higher than the previous estimate.
The initial market reaction to the data was to send soybean prices down nearly to the lowest since early July before futures recovered most of their losses.