Corn, Soybean Prices Slide on Robust U.S. Supplies – WSJ

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

Dennis DeLaughter,

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

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Soybeans Extend Slump on USDA Data as Corn Drops to 5-Month Low – Bloomberg

Soybeans Extend Slump on USDA Data as Corn Drops to 5-Month Low

Soybeans extended the biggest slump in five years to the lowest level since 2012 after a U.S. government report showed farmers will plant record acreage. Corn declined to a five-month low.

Soybeans for November delivery lost as much as 0.6 percent to $11.505 a bushel on the Chicago Board of Trade, the lowest level for a most-active contract since Jan. 12, 2012, before trading at $11.51 by 10:22 a.m. in Singapore. Futures plunged 5.8 percent yesterday for the biggest drop since July 2009.

Seedings in the U.S. will reach 84.839 million acres, up 11 percent from a year earlier, the U.S. Department of Agriculture said in a report yesterday. Inventories on June 1 were 405 million bushels, larger than the 382 million estimated by analysts in a Bloomberg survey. About 72 percent of the crop was rated in good or excellent condition on June 29, up from 67 percent a year earlier, the USDA said in a separate report yesterday. The U.S. is the world’s biggest grower.

“The market is now looking at the conditions of the U.S. crop, which is quite good as well, and started to build in some large expectations for new crop,” Paul Deane, an analyst at Australia & New Zealand Banking Group Ltd., said today by phone from Melbourne.

Corn for December delivery fell as much as 0.9 percent to $4.215 a bushel, the lowest level for a most-active contract since Jan. 21, before trading at $4.225. Prices dropped 4.9 percent yesterday, the biggest decline since June 28, 2013.

Futures tumbled 15 percent in the second quarter, the most since the three months through June 2013, as stockpiles in the U.S. reached 3.854 billion bushels following record production last year, the USDA said. The average estimate of 26 analysts surveyed by Bloomberg was 3.723 billion bushels.

Wheat for September delivery rose 0.5 percent to $5.805 a bushel, rebounding from a 17 percent slump last quarter, the biggest decline since June 2011. Prices dropped 2.7 percent to $5.775 yesterday, the lowest since Feb. 7.

To contact the reporter on this story: Chanyaporn Chanjaroen in cchanjaroen

To contact the editors responsible for this story: Jake Lloyd-Smith at jlloydsmith Ovais Subhani

Today Future

Corn futures closed sharply lower on the day, registering losses between 18-23 cents. The trade had a bearish reaction to the Quarterly Grain Stocks and Planted Acres reports released earlier this morning. Average trade estimate for corn acreage from USDA this morning was 91.709 million acres according to a Reuters survey, with USDA pegging the actual figure at 91.60 MA. That wasn’t a big enough cut to be bullish. The average stocks estimate was 3.723 billion bushels, with actual USDA figure coming in at 3.854 bbu. Weekly export inspections last week were 872,960 MT, off from 988,080 MMT the prior week. YTD shipments are now 37,842,772 MMT, which compares to 14,774,469 MMT at this time last year. Crop conditions increased this week, with the Brugler500 index keyed to USDA ratings rising to 389. It is also above last years 373 for this date.

Jul 14 Corn closed at $4.24 1/4, down 18 3/4 cents,
Sep 14 Corn closed at $4.18 3/4, down 23 1/2 cents,
Dec 14 Corn closed at $4.25 1/4, down 22 cents
Mar 15 Corn closed at $4.36 1/4, down 21 3/4 cents

Soybean futures closed sharply lower on the day, registering losses between 31 and 72 cents. The bearish reaction is being attributed to the Quarterly Grains Stocks and Acreage figures released earlier this morning. Trade estimates for the USDA Planted Acreage report called for 82.2 ma of soybeans, with USDA pegging the actual figure at a record high 84.839 MA. The average guess for the June 1 stocks figure at 382 million bushels, with the actual figure coming in at 405 mbu. Weekly soybean export inspections were reported at 72,804 MT, down from 61,919 MT last week. The Brugler500 crop condition index increased 1 point from last week to 381. Last year at this time the figure stood at 370. Soybeans emerged came in at 94%, up from the 90% figure last week.

Jul 14 Soybeans closed at $14.00 1/2, down 31 1/2 cents,
Aug 14 Soybeans closed at $13.29 3/4, down 48 1/4 cents,
Sep 14 Soybeans closed at $11.93 3/4, down 72 1/4 cents,
Nov 14 Soybeans closed at $11.57 1/4, down 70 3/4 cents,
Jul 14 Soybean Meal closed at $458.30, down $11.50,
Jul 14 Soybean Oil closed at $38.85, down $1.13

Wheat futures closed 15 to 20 cents lower on the day. The wheat trade also had a bearish reaction to the USDA report earlier this morning, with the July 14 CBOT contract displaying the most weakness and closing at $5.64. Trade estimates for the USDA Planted Acreage report called for 55.77 ma , with the actual figure being reported at 56.47 MA. Spring wheat acreage was up 700,000 from the March intentions, with most having expected a drop due to switches to soybeans. That didn’t happen. The average guess for the June 1 stocks figure was for 595 million bushels, with the actual figure coming in at 590 mbu. The overall winter wheat crop condition rating was again UNCH, with the Brugler500 index at 269. The HRW subindex improved by 2 points TO 247, while the SRW index was down 2 from the previous week to 363. USDA reported 43% of the winter wheat crop has been harvested, behind the 48% average for this date. Major producer Kansas is lagging behind at 40% vs. the usual 66% for this time

Jul 14 CBOT Wheat closed at $5.64 3/4, down 20 1/2 cents,
Jul 14 KCBT Wheat closed at $7.10 1/2, down 15 1/2 cents,
Jul 14 MGEX Wheat closed at $6.67 1/4, down 15 3/4 cents

Slowing China Demand for Feed Ingredient Jolts U.S. Grain, Soy Markets

Slowing China Demand for Feed Ingredient Jolts U.S. Grain, Soy Markets

Beijing Has Cut Purchases of Dried Distillers’ Grains, a Co-Product of Corn Ethanol, Amid GMO Concerns

June 27, 2014 12:52 p.m. ET

Dried distillers’ grains, a byproduct of ethanol production used as feed for livestock, are loaded onto a grain truck at a North Dakota ethanol plant. Bloomberg News

A tough stance by China on imports of a widely used U.S. feed ingredient is rattling grain and soy markets.

The Asian country in recent weeks has curtailed purchases of U.S. dried distillers’ grains, a co-product of corn ethanol that is fed to cattle and pigs, amid concerns the shipments may contain a genetic modification that Beijing hasn’t approved, said industry executives and traders. The action comes after China also slowed imports of U.S. corn [1]over concerns about the GMO trait.

China stopped issuing new import permits for the ethanol co-product, also known as DDGs, several weeks ago, according to people in the grain industry. Chinese government officials haven’t confirmed a change in policy and didn’t respond to repeated requests for comment.

The move has caused prices of the ingredient to slide about 19% in the U.S. since June 3, based on Agriculture Department data.

The wider availability of the product in the U.S. has pressured prices for competing animal-feed ingredients, including corn and soybean meal. Corn futures have dropped 5% this month. Corn for July delivery rose 0.1% to $4.43 a bushel on Friday at the Chicago Board of Trade.

Futures for soybean meal, made from crushed soybeans and widely fed to hogs and chickens, have dropped about 6% this month, reaching a three-month low on June 20 at the CBOT. Both DDGs and soybean meal are rich in protein, so livestock feeders are expected to substitute DDGs for the meal as prices fall.

“DDGs are cutting into some corn usage and cutting into meal prices,” said

Sterling Smith,

a futures specialist at brokerage Citi Futures in Chicago. “The DDG ban has changed the face of the DDG market.”

The wholesale price for the product in the eastern U.S. Corn Belt was $167.50 a ton on June 24, down from $207.50 on June 3, according to government data.

“People will be feeding the maximum amount of DDGs they can—it’s very price-competitive,” said

Al Kluis,

owner of brokerage Kluis Commodities in Wayzata, Minn.

The price drop could lower profits for U.S. ethanol producers, many of which count on the product for 20% to 25% of revenue.

The U.S. is expected to produce 42.9 million tons of DDGs in the 2013-14 season ending Aug. 31, up 8.7% from a year earlier, according to Iowa State University data. Of that, about one-quarter will be exported.

China has been a major buyer in recent years. It accounted for a third of U.S. exports last year and more than doubled its imports to 1.85 million tons in this year’s first four months from a year earlier.

China’s restriction on DDG imports comes after it all but stopped buying U.S. corn because some shipments contained the MIR 162 genetically modified trait, developed by Swiss seed and chemical maker

Syngenta[2] AG SYNN.VX -0.12%[3]

. Since late last year, China has rejected some corn and DDG shipments because authorities said they contained the banned GMO strain. The rejections, including over one million tons of corn, have hurt profits for U.S. grain traders, including Cargill Inc. and

Archer Daniels Midland[4] Co. ADM -0.25%[5]

Some of the rejected corn shipments were resold to buyers in other parts of Asia, such as Vietnam, South Korea and Japan, according to the USDA. However, it is much harder to divert shipments of DDGs, as China is the biggest buyer of the feed ingredient from the U.S. by a large measure.

Ryan Thorpe,

chief operating officer at Tharaldson Ethanol in Casselton, N.D., said the move is “very concerning,” considering his company exports as much as 40% of its DDGs to China. Mr. Thorpe said he thinks China is using concerns over Syngenta’s biotech trait as a reason so it can pay less for livestock feed[6].

China’s restrictions are affecting purchasing decisions by dairy farmers in its own country.

Li Ruibin,

technical director of Fucheng dairy farm in Hebei province, which has some 8,000 cows, said he can no longer buy imported DDGs. They cost about the same as domestic varieties, but he said he thinks they are of superior quality. He said he already faced higher feed costs because drought in California had boosted the cost of imported alfalfa from the U.S.

U.S. grain and ethanol industry officials said they hoped China soon would ease the restrictions. “I would hope this sorts itself out in weeks, not months,” said

Bob Dinneen,

president of the Renewable Fuels Association, a trade group for U.S. ethanol companies.

—Isabella Steger,

Andrea Gallo

and Chuin-Wei Yap contributed to this article.

Write to Tony C. Dreibus at tony.dreibus@wsj.com[7]