Corn and soybean prices plunged, dragging wheat lower too,
after the US said it had far more of the crops in stockpiles than had been
thought, and said that soybean sowings would break a record by more than 7.4m
New crop corn futures for December, the best-traded lot,
tumbled nearly 5% to a contract low of $4.25 ½ a bushel in Chicago.
The new crop November soybean contract plunged 5.2% to
$11.64 a bushel, its lowest in nearly four months.
Chicago wheat for September dropped 4.4% to $5.67 ½ a
bushel, the contract's lowest since January.
The declines followed the release by the US Department of
Agriculture data showing domestic stocks of the grains significantly bigger
than had been thought, implying less pressure on buyers to pay up to secure
For corn, US inventories as of June 1 were estimated at a
four-year high of 3.85bn bushels.
While investors had expected a significant rebuild from last
year, thanks to last year's record harvest, the extent of the recovery - up 1.1m
bushels or 39% year on year - was some 130m bushels more than investors had
Stocks data, change on market estimate and (year on year)
Corn: 3.86bn bushels, +139m bushels, (+1.095bn bushels)
Soybean: 405m bushels, +27m bushels, (-30m bushels)
Wheat: 590m bushels, -8m bushels, -128m bushels
US inventories as of June 1. Source: USDA
For soybeans, US inventories were 405m bushels. While
down 30m bushels year on year, and at their lowest since at least the 1980s, the figure was 27m bushels above expectations.
As an extra setback to soybean prices, the USDA estimated
plantings at a record 84.8m acres – a far bigger figure than the 81.5m acres
than it estimated after a farm survey in March.
The soybean sowings figure was also 2.7m acres bigger than
the market had forecast.
While strong soybean prices have encouraged growers to plant
the crop, the USDA also highlighted that "planting conditions were much
improved with last year, when wet conditions delayed planting in many areas of
the Corn Belt and Delta".
In fact, this year, soybean sowings are in line with those
last year, or ahead, in all 31 major producing states except Oklahoma.
For corn sowings, the estimate of 91.64m acres, was 50,000
acres smaller than the USDA's March report had indicated, and below market
However, the 84,000-acre drop below traders' forecasts was
deemed relatively small in production terms, limiting the support to futures.
Acreage data, change on market forecast and (on March 31 estimate)
Corn: 91.641m acres, -84,000 acres, (-50,000 acres)
Soybeans: 84.839m acres, +2.685m acres, (+3.346m acres)
Wheat: 56.474m acres, +656,000 acres, (+659,000 acres)
Incl spring wheat: 12.709m acres, +859,000 acres, (700,000 acres)
For wheat, June 1 stocks were, at a six-year low of 590m bushels, actually a
little below expectations.
However, any bullish impact was more than offset by a
plantings estimate for spring wheat of 12.7m acres – up 10% year on year and
well above expectations.
'Bearish across the
The data were "bearish across the board", broker CHS Hedging
Steve Kahler, chief operating officer at Teucrium Trading, an
issuer of commodity exchange traded products. Said the reports showed that corn
and soybean supplies "are higher than expected, and there is no sign of the tap
being turned off".
Whether the higher-than-expected stocks data were down to,
say, disappointing feed demand or, for soybeans, strong imports, will become
clearer on July 11, when the USDA unveils its monthly Wasde crop report.
"That will give more clarity on exactly what categories
within supply and demand leant to the stocks, to leave them higher than