Corn Prices Fall as Farmers Plant More –

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.


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