Corn Prices Fall as Farmers Plant More
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.