Chicago | Reuters –– A double-whammy of U.S. crop reports pegging corn plantings and inventories above traders’ estimates knocked down grain futures on Tuesday and fuelled forecasts for further price declines.
Taken together, the data lifted expectations for corn supplies after U.S. farmers brought in a record harvest last year, signalling a boon for livestock producers who benefit from cheap prices for grain used to feed hogs and cattle.
The “double-barrel bearish corn updates” from the U.S. Department of Agriculture suggest corn prices will drop below the 2015 low of about $3.66 a bushel, said Rich Feltes, vice-president of research for brokerage RJ O’Brien (all figures US$).
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Chicago Board of Trade May corn futures ended down 18-1/4 cents at $3.76-1/4 a bushel. The nearby contract fell to a one-week low after the reports were issued from a two-month high reached before the data release.
May soybean futures ended up 5-1/2 cents at $9.73-1/4 a bushel.
USDA, in a quarterly report, said farmers and grain elevators had 7.7 billion bushels of corn in storage as of March 1, topping estimates for 7.6 billion and the seven billion held in bins a year earlier. The large stocks indicate demand for animal feed last quarter was not as strong as expected, traders said.
Separately, USDA predicted farmers will sow 89.2 million acres of corn this spring, above analysts’ estimates for 88.7 million. Soybean plantings were projected at a record 84.6 million acres, below expectations for 85.9 million.
“The corn numbers were negative across the board,” said Joe Vaclavik, president of brokerage Standard Grain.
Prior to the release of the plantings data, traders had expected farmers to switch more acres to soybeans from corn. Prices for both crops are down from a year ago, and corn is more expensive to grow.
However, farmers in major growing states like Iowa and Nebraska are largely sticking with corn because it “still gives you the best chance for the big profitability,” said Don Roose, president of brokerage U.S. Commodities.
“Your big states are still planting big acres,” he added.
Last year, U.S. farmers planted 90.6 million acres of corn and 83.7 million acres of soybeans.
Separately, wheat futures fell as worries about dry U.S. crop weather eased after prices jumped four per cent on Monday, traders said.
CBOT May wheat dropped 18-1/2 cents to $5.11-3/4 a bushel. The contract reached a one-week high of $5.31-3/4 earlier in the session.
— Tom Polansek reports on agriculture and crop commodity markets for Reuters from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.
