(Agrimoney) – Corn futures tumbled, dragging prices of other crops lower, as US officials issued a double dose of upbeat news for supplies – pegging domestic stocks of the grain and spring sowings prospects above market expectations.
Corn for May touched $3.80 ½ a bushel in Chicago at one stage, down 3.6% on the day, after the US Department of Agriculture unveiled two of its most anticipated reports of the year – both of which presented ammunition for price falls.
Data on US grain inventories showed corn stocks rising faster than had been expected, to 7.74bn bushels as of March 1, up 11% year on year, and some 130m bushels higher than the market had expected.
The data implied corn use of 3.47bn bushels in the previous three months, only 30m bushels higher than a year before.
‘Expectation of lower prices’
On sowings, the USDA said that its survey of farmers suggested corn plantings of 89.2m acres – down 1.4m acres year on year, and a five-year low, and reflecting weaker profitability prospects.
“The reduction in planted acres is mainly due to the expectation of lower prices and returns in 2015,” the USDA said.
However, the decline was less steep than the 1.9m-acre drop expected by analysts, who had forecast lower crop prices having an even bigger effect.
The department added that plantings were “expected to be down across most of the Corn Belt”, with the exception of the northern states of Minnesota and Wisconsin, where sowings will rise, while to the west in Nebraska area will be unchanged.
Wheat prices tumble too
The drop in corn futures dragged on wheat, which for May shed 3.6% to $5.11 a bushel in Chicago, beside some below-forecast data on the food grain.
The USDA estimated US wheat inventories as of March 1 at 1.12bn bushels, up 6% year on year but 20m bushels below market expectations.
And US farmers were estimated lifting durum plantings less vigorously than the market had forecast, and making an unexpected cut to sowings of other spring wheat types.
While spring wheat area increases are expected in much of the traditional heartland for the crop, including top grower North Dakota, second-ranked Montana will see lower plantings.
Total wheat area, including winter wheat, was pegged at 55.4m acres, some 400,000 acres below market expectations.
Soy sidesteps sell-off
However, soybeans recovered from an initial sell-off to stand up 0.8% at $9.75 a bushel for May delivery, 45 minutes after the data were released.
While the USDA estimated soybeans stocks entering March at 1.33bn bushels up 34% year on year, the figure was 16m bushels below traders’ expectations.
And the USDA estimate for soybean sowings of a record 84.6m acres – some 1.1m acres above an initial forecast last month – was well below the 85.9m-acre figure that investors had foreseen.
While sowings were seen increasing in states including top producer Iowa and in Arkansas and Ohio, other major growers, Kansas and Nebraska will see a decline.
