Corn, Soybean Prices Slide on Robust U.S. Supplies
Corn and soybean prices tumbled Monday after the U.S. Agriculture Department reported higher-than-expected supplies of the crops and said soybean plantings would easily set a record this year.
Corn futures slid more than 4% to a five-month low and soybean futures fell to the lowest in nearly two weeks. Wheat prices slipped to an almost five-month low.
The declines came after the USDA said domestic corn stockpiles totaled 3.854 billion bushels on June 1, topping analyst estimates for about 3.7 billion bushels and 39% higher than the year-earlier level.
Soybean prices reached the lowest level in two weeks on Monday. Bloomberg News
Corn supplies swelled following a record U.S. crop last year, and demand from livestock feeders in recent months turned out to be less than analysts had expected. A porcine virus that is killing piglets and a cattle herd that at the beginning of the year was the smallest in more than 60 years has led to the large inventories, analysts said.
“These numbers are shocking,” said
an analyst at brokerage Vantage RM in Houston. “There’s a lot of corn out there.”
The government estimated that U.S. farmers planted 91.6 million acres of corn this spring, the lowest in four years. The acreage estimate was slightly below analysts’ forecasts, but promising weather conditions in the Farm Belt early in the season has led to predictions that the fall corn harvest could surpass last year’s.
Corn futures for July delivery fell 18.75 cents, or 4.2% to $4.2425 a bushel, the lowest settlement price for a front-month contract since Jan. 9.
Prices of the grain—the largest U.S. crop by revenue—have tumbled about 15% since early May. Prices plummeted 40% last year after rising to a record in August 2012 as a severe U.S. drought battered fields.
Soybean futures tumbled Monday after the government estimated farmers will plant a record 84.84 million acres this year, sharply higher than the average analyst forecast of about 82 million acres and the USDA’s prior forecast in March for about 81.49 million acres.
The USDA attributed the soybean planting increase to “much improved” seeding conditions over the spring compared with a year earlier. Planting of soybeans was 95% complete as of June 22, ahead of last year’s pace, when wet weather delayed sowing in much of the country.
Many U.S. farmers planted soybeans this year instead of corn because prices for the oilseed have been more favorable.
Still, the soybean-acreage figure was “shockingly large,” said Doug Bergman, a vice president with brokerage RCM Asset Management in Chicago. The report is “extremely bearish” for prices for soybeans that will be delivered after the fall harvest, he added.
The USDA’s estimate for soybean stockpiles also surprised market watchers because demand for the oilseeds from overseas buyers and domestic processors has been strong. Soybean inventories at the start of the month totaled 405 million bushels, the lowest since 1977, according to the USDA. That compared with 435 million on the same date a year earlier and analysts’ average estimate of 387 million bushels.
Soybeans for July delivery fell 32 cents, or 2.4%, to $14.005 a bushel, the lowest settlement price since June 17.
Wheat futures also fell, reaching a nearly five-month low, after the USDA’s outlook for planted acreage topped analysts’ expectations.
Growers likely planted 56.47 million acres with the grain, which compares with the USDA’s March outlook for 55.815 million, Monday’s report said. Market watchers had projected all-wheat acreage at about 55.7 million.
About 590 million bushels of wheat were in U.S. storage as of June 1, down from 718 million last year, according to the report. Analysts had projected inventories at 603 million bushels.
Wheat futures for July delivery fell 18.75 cents, or 3.2%, to $5.6475 a bushel in Chicago trading, the lowest closing price since Feb. 3.
—Kelsey Gee and Alan Zibel contributed to this article.
Write to Tony C. Dreibus at tony.dreibus