Corn Prices Fall as Farmers Plant More – WSJ.com

Corn Prices Fall as Farmers Plant More
[image]Associated Press

The USDA estimates that U.S. farmers will plant the most acres of corn since 1936. Above, a cornfield in Illinois last month.

Corn futures prices fell Friday after the U.S. Department of Agriculture estimated that farmers would plant more corn this year than analysts had expected.

Corn acreage will total 97.4 million acres, the most since 1936 and up slightly from last year, the USDA said.

U.S. corn futures for July delivery, the front-month contract, were down 4.25 cents, or 0.6%, at $6.63 a bushel shortly after the data was released. December futures, tied to delivery of corn after this fall’s harvest, tumbled 23.5 cents, or 4.4%, at $5.15 a bushel.

The forecast surprised analysts who had expected the cold, wet spring in the Midwest to prompt many farmers to abandon plans to sow corn. Analysts on average had expected the USDA to cut its forecast for corn acreage to 95.3 million acres from the agency’s March estimate of 97.3 million acres, according to a Dow Jones Newswires survey.

“I thought it was a misprint,” said Larry Glenn, an analyst at Frontier Ag, a commodities brokerage in Quinter, Kan. “My first deal was, ‘that can’t be right’…We’re bound to be down some.”

Farmers were slow to plant corn in April and early May but began seeding the crop at a record-tying pace starting in mid-May amid warmer temperatures and lighter rain, the USDA said.

The forecast suggests that U.S. corn supplies could increase sharply if summer weather is favorable for the nation’s crop. Last year, a severe U.S. drought battered the Farm Belt, sending corn prices to a record $8.3125 a bushel on Aug. 21. But futures have fallen since then due to tepid demand from foreign importers and expectations that the U.S. could produce a record crop this fall.

The USDA said corn supplies as of June 1 totaled 2.76 billion bushels. That marked the lowest level in 16 years and was below analysts’ forecast of 2.86 billion bushels, but traders focused instead on the fact that the government didn’t reduce projected corn acreage.

The government also raised its estimate of planted soybean acreage to a record 77.7 million acres this year, up 1% from last year but still shy of expectations. Analysts expected the USDA to estimate this year’s domestic soybean plantings at 78.02 million acres, in part on the view that farmers unable to plant corn would switch to soybeans, which have a later growing season.

Soybean planting also was hindered by cool and wet weather, though “during the first part of June, conditions did allow good progress to be made in many areas,” the USDA said.

Domestic soybean supplies totaled 435 million bushels on June 1, the lowest level at that point since 2004. Analysts had expected 441 million bushels.

Soybean futures were mixed after the report, with July soybean futures up 9.25 cents, or 0.6%, at $15.5775 a bushel at the Chicago Board of Trade.

Wheat futures declined in tandem with corn futures. Wheat prices often are affected by corn prices because both grains are used in animal feed.

CBOT July wheat futures recently were down 9.25 cents, or 1.4%, at $6.5425 a bushel, after sinking to a one-year low before the USDA’s reports.

The USDA also raised slightly its estimate of spring-wheat plantings to 12.3 million acres.

Wheat stockpiles fell 3% to 718 million bushels. Analysts had forecast 750 million bushels.

Write to Owen Fletcher at owen.fletcher and Jeffrey Sparshott at jeffrey.sparshott

A version of this article appeared June 28, 2013, on page B5 in the U.S. edition of The Wall Street Journal, with the headline: Crop Forecast Stunts Corn Prices.

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Corn Leads Grain Plunge as U.S. Acreage Tops Estimates – Bloomberg

Corn futures tumbled to a 32-month low, while soybeans and wheat fell to the cheapest in a year, after the government said U.S. farmers will plant more grain than forecast and the largest oilseed crop ever.

Planting of corn, the biggest domestic crop, jumped to 97.379 million acres, the most since 1936, the U.S. Department of Agriculture said today in a report. Analysts in a Bloomberg survey expected 95.431 million. Wheat acreage reached a four-year high of 56.53 million, and soybeans were sown on a record 77.728 million. Corn dropped for the seventh straight session, and wheat capped the longest slump since December 2009.

Corn Leads Grain Plunge as U.S. Acreage Tops Analysts Estimates

Corn is loaded into a grain hopper in Le Roy, Illinois. Photographer: Daniel Acker/Bloomberg

U.S. farmers, the world’s biggest growers of corn and soybeans, are forecast by the USDA to produce record harvests this year, while the United Nations predicts global wheat output will be the highest ever. That will cut costs for buyers including Archer-Daniels-Midland Co., the largest corn processor, and Tyson Foods Inc., while curbing food prices down 9.5 percent from a record in February 2011.

“Farmers planted more corn, soybeans and wheat than almost anyone expected after all the rain earlier this year,” Dale Durchholz, the senior analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “The U.S. crop potential is getting bigger, and that will keep the markets on the defensive and put farmers in a more aggressive selling mood.”

Corn futures for delivery in December tumbled 5.1 percent to close at $5.11 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest decline for the price after the harvest since March 28. The price touched $5.06, the lowest for the most-active contract since Oct. 8, 2010.

Soybeans, Wheat

Soybean futures for November delivery fell 1.8 percent to $12.52 a bushel. Earlier, the oilseed touched $12.47, the lowest since June 4, 2012.

Wheat futures for September delivery slid 2.4 percent to $6.5775 a bushel. Earlier, the price touched $6.56, the lowest since June 19, 2012. The grain dropped for seven straight sessions.

Companies that use crops to make livestock feed, fuel and food will benefit from the slump in futures, said Brett Hundley, an analyst at Richmond, Virginia-based BB&T Capital Markets, a research firm that makes stock recommendations on agribusiness companies.

Lower Costs

“Much bigger numbers for corn acres are going to filter their way through the food-supply chain,” Hundley said in a telephone interview. “It will lower potential costs for protein producers and corn-sweetener producers.”

In New York, ADM (ADM) shares rose 0.6 percent to $33.91 after reaching $34.22, the highest since May 28. They have jumped 24 percent this year.

Tyson climbed 1.8 percent to $25.68. The stock has advanced 32 percent this year.

Increased corn sowing will boost stockpiles that fell to the lowest in 16 years. Inventories on June 1 totaled 2.76 billion bushels, down 12 percent from the prior year and the lowest since 1997, the USDA said today in a separate report. Analysts forecast reserves at 2.862 billion bushels. In 2012, the most-severe drought since the 1930s cut production.

July Premiums

The premiums for July corn and soybean futures above the most-active contracts after the harvest surged to records after the USDA confirmed shrinking inventories, Roy Huckabay, an executive vice president at the Linn Group in Chicago, said in a telephone interview.

Today, the premiums surged 31 percent to $1.68 for corn and 14 percent to $3.13 for soybeans.

The increase in acreage and forecasts for no excessive rain or extreme heat in the U.S. will boost crop prospects, Huckabay said. Drier weather and warm temperatures in the next 10 days will aid plant development from Minnesota to Illinois, where some fields got more than three times the normal amount of rain in the past month, Commodity Weather Group LLC in Bethesda, Maryland,, said in a report.

About 65 percent of the corn was rated in good or excellent condition on June 23, up from 56 percent a year earlier, and 65 percent of soybeans earned top ratings versus 53 percent, the USDA said in a report this week.

“The market spreads are trying to slow demand for last year’s supply, while factoring in a big crop this year,” Huckabay said. “Corn and soybean supplies will be tight before what should be record crops this year. Weather looks wet with little heat and that means good yields.”

To contact the reporters on this story: jwilson29; Tony C. Dreibus in Chicago at tdreibus

To contact the editor responsible for this story: Steve Stroth at sstroth

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How Does USDA Compile Crop Progress Reports? | Farm Journal Magazine

This week, an AgWeb reader in Hancock County, Iowa, wrote: “We have obliged with our crop conditions, and that is helpful to all of us. But everyone is asking where USDA comes up with their numbers. Can you obtain any remarks from them? We would all appreciate this.”

In response to that question, AgWeb reached out to Julie Schmidt, agricultural statistician with the National Agricultural Statistics Service (NASS), for more information about how weekly planting progress, crop condition and crop emergence reports are gathered. She shared the following steps:

1. Each week, NASS generates and sends questionnaires to Extension and Farm Service Agency agents in counties throughout the U.S. The survey is sent to about 4,000 people each week. NASS wants every county to be represented in the report, though response rates vary. In some cases, a single county might have multiple reporters, while other counties may not be represented.

NASS strives to cover as many of the agriculturally important areas within a state as possible so that the best representation of a crop is provided. National crops such as corn, soybeans, sunflowers and sugar beets are among those for which planting progress, emergence and crop condition data are gathered, though states can choose to add questions about local crops.

2. County data is compiled into districts and then into a state-level report that is sent to NASS headquarters in Washington, D.C.

3. County data are weighted by NASS County Estimates. NASS tries to include the states that encompass the largest percentage of production for a given crop as part of the National program. These states are weighted using the previous year’s acreage, so that the U.S. estimate is more reflective of planting or crop development progress in the larger-producing states.

For example, of the 18 corn-producing states surveyed, the U.S. estimate would be more heavily influenced by progress in Iowa than by other states because it had the most acreage planted to corn in 2012. Each state’s progress estimate is multiplied by the previous year’s acreage for a given crop. Those products are then summed, and that sum is divided by the sum of the previous year’s acreage for those 18 states.

By incorporating acreage for weighting, the U.S. estimate is more representative of what is happening in the areas where the larger portion of a crop is grown.

“It’s definitely a look at the aggregate,” Schmidt says.

She acknowledges that reporting can vary widely, even within a county. A farmer who received plenty of rain one week might live just a few miles down the road from another who hasn’t seen rain in four weeks. The same is true for factors such as crop condition and growth.

“What the numbers try to show is kind of overall, what is going on at the state and the national level as well,” Schmidt says.

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USDA Sets the Stage For the June 28 Planted Acreage Report

The USDA’s June Supply-Demand report decreased the expected size of the 2013 corn crop, but using a reduced national yield estimate, not the expected reduction in acreage. USDA statisticians are not yet ready to quantify barren corn acres just yet, and may wait until the June 28 planted acreage report. Nevertheless, the lower production did not impress the traders and new crop corn contracts reflected the disappointment of the market.

The June World Agricultural Supply Demand Estimate (WASDE) cut 135 million bushels from the estimated size of the corn crop getting started. USDA attributed that to late planting and corresponding yield deterioration. Total production was estimated at 14.005 billion bushels, based on a national average yield of 156.5 bushels, planted on 97.3 million acres. Compared to the May estimates:

  1. The carry-in from the 2012 crop was raised 10 million to 769 million bushels, total production dropped from 14.140 billion to 14.005 billion bushels. Feed use was cut from 5.325 billion to 5.200 billion bushels. Ethanol use was raised 50 million bushels from4.860 billion to 4.900 billion bushels. Export estimates remained steady at 1.3 billion bushels. The carry-out was lowered from 2.004 billion to 1.949 billion bushels. USDA raised the average price for corn by 10 cents to a range of $4.40 to $5.20.
  2. USDA said, “Corn imports are raised 25 million bushels based on the strong pace of imports to date and expectations that feeders in some locations will continue to supplement domestic supplies as old-crop corn becomes tighter during the summer months.”
  3. “Global coarse grain beginning stocks are also lowered as a reduction in 2012/13 China corn production is only partly offset by an increase in 2012/13 Brazil corn production this month. China corn production is lowered 2.4 million tons based on the latest government revisions for the 2012/13 crop. Brazil corn production is raised 1.0 million tons for 2012/13 based on higher reported area for the safrina crop which will be harvested in the coming weeks.”

The June WASDE report was a carbon copy of the May report for new crop soybeans. However, some changes were made in the supply-demand balance sheet for old crop soybeans. Compared to May:

  1. Soybean imports are raised 5 million bushels to 25 million based on relatively strong imports through April and expected additional gains through the end of the marketing year. Soybean exports for 2012/13 are reduced 20 million bushels to 1.33 billion bushels reflecting exceptionally low shipments and sales in May and competition from Brazil. USDA added 25 cents per bushel to the price of new crop soybeans, which are now in a range of $9.75 to $11.75.
  2. Although soybean exports are reduced, U.S. soybean meal exports are increased this month reflecting stronger-than-expected shipments this spring as importers have been slow to shift to South American supplies. As a result of increased soybean meal exports, the U.S. soybean crush is projected at 1.66 billion bushels, up 25 million. Soybean ending stocks for 2012/13 are projected at 125 million bushels, unchanged from last month.

For wheat, the June WASDE report reflected the higher production estimates project in the June Crop Production Report, stemming from an increased head count per square foot. With the larger crop come higher supplies, and USDA reported,

  1. “Projected production for 2013/14 is up 23 million bushels as higher yields boost forecast production of Hard Red Winter wheat in the Southern and Central Plains and Soft Red Winter wheat across the South and Midwest. Exports are projected 50 million bushels higher for 2013/14 with strong early season sales and a reduced outlook for foreign production this month. Ending stocks for 2013/14 are projected down 11 million bushels. Projected stocks of 659 million bushels remain at a 5-year low. The projected range for the 2013/14 season average farm price is raised 10 cents on both ends to $6.25 to $7.55 per bushel.
  2. Due to global weather issues, USDA said, “World production is projected at 695.9 million tons, down 5.2 million from last month with reductions for Ukraine, Russia, and EU-27. Persistent dry weather in key growing areas of southeastern Ukraine and adjoining areas of southern Russia reduces production prospects 2.5 million tons and 2.0 million tons, respectively.

Regarding the latest in US wheat production, USDA’s June Crop Production report indicated:

  1. Winter wheat production is forecast at 1.51 billion bushels, up 2 percent from the May 1 forecast but down 8 percent from 2012. Based on June 1 conditions, the United States yield is forecast at 46.1 bushels per acre, up 0.7 bushel from last month but down 1.1 bushels from last year.
  2. Hard Red Winter production, at 781 million bushels, is up 2 percent from last month. Soft Red Winter, at 509 million bushels, is up 2 percent from May. White Winter, at 219 million bushels, is up 1 percent from last month. Of the White Winter production, 11.5 million bushels are Hard White and 207 million bushels are Soft White

Summary:

USDA’s June numbers for corn, soybeans, and wheat were generally distasteful to the market and only old crop soybeans enjoyed minimal success on the day. The market wanted USDA to cut corn acres and carryout, but any acreage reduction will be saved until the June 28th report and based on better data. Old corn remains tight, but cutting the export estimate was seen as a negative. For soybeans, the USDA did not change its new crop estimate, although planting delays may figure into the June 28 acreage report and the July production estimate.

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USDA Seen Lowering 2013-2014 Corn Carryout

Wednesday morning’s monthly supply/demand update from USDA is expected to show a drop of nearly 200 million bushels in the projected U.S. corn carryout for 2013-2014 due to reduced production prospects.

Trade estimates of 2013-2014 U.S. corn ending stocks average 1.795 billion bushels in a range from 1.175 to 2.200 billion bushels compared with USDA’s May forecast of 2.004 billion bushels, according to a survey of 24 analysts by Reuters News Service.

There are ideas USDA could further lower its U.S. corn yield forecast, although it already lowered that estimate by 5.5 bu./acre in May to reflect slow planting progress. USDA is not likely to change its planted acreage estimate ahead of the release of its Crop Acreage Survey on June 28, although actual plantings seem certain to fall short of the March planting intentions estimate of 97.3 million acres.

Only minor changes are anticipated in USDA’s old-crop corn balance sheet. Trade estimates of the 2012-2013 U.S. corn carryout average 759 million bushels, dead on USDA’s May estimate, in a range from 684 million bushels to 919 million bushels.

Few changes are expected in USDA’s U.S. soybean supply/demand balance sheets for 2012-2013 or 2013-2014. Trade estimates of the old-crop soybean carryout average 121 million bushels in a range from 80 to 140 million versus USDA’s May estimate of 125 million bushels. Pre-report estimates of 2013-2014 soybean ending stocks average 268 million bushels, 3 million bushels above USDA’s May estimate, in a range from 185 to 344 million.

The slightly higher outlook for the 2013-2014 U.S. soybean carryout primarily reflects expectations for corn planting delays to boost U.S. soybean acreage. USDA should not lower its U.S. soybean yield due to slow planting progress, however, as the yield model being used by USDA economists this year does not include a planting progress variable.

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