Crop futures locked limit down in Chicago, where wheat plunged nearly 8%, after a barrage of reports pointed to more generous US supplies of major crops than had been thought.
US Department of Agriculture officials raised their estimate for domestic soybean inventories at the end of 2011-12, a key measure of the availability of supplies, by 45m bushels to 275m bushels, a far bigger upgrade than analysts had expected.
And while, in grains, they trimmed forecasts for end-of-season stocks, the reductions - of 2m bushels for corn and 8m bushels for wheat - were considerably smaller than the market had expected.
The data - released in a bundle of reports with a history of provoking wild swings in futures prices - prompted expectations of corn and wheat futures opening the live Chicago trading session down 3%, and soybeans down 2%.
'Price pressure'
"To put it simply, the report did not offer the trade what it was looking for, and more importantly, what it was prepared for," Minneapolis-based broker Benson Quinn Commodities said before the opening bell.
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Closing grain prices
Chicago corn: $6.11 ½ a bushel, -6.1%
Chicago wheat: $6.05 a bushel, -5.6%
Kansas wheat: $6.73 a bushel, -4.1%
Paris wheat: E194.00 a tonne, -3.6%
Chicago soy: $11.82 ½ a bushel, -2.2%
London wheat: £154.00 a tonne, -1.8%
Prices for March contracts, except May in London |
"Expect all three markets to come under considerable pressure as the trade unwinds positions that are just not going to work right now based on the information that was released this morning."
Corn futures plunged the exchange maximum of 40 cents, or 6.1%, to $6.11 ½ a bushel in Chicago, where wheat at one point slumped 7.6% to $5.92 a bushel.
Soybeans fell 4.4% to $11.50 a bushel before paring losses to end down 2.2%.
In Europe, Paris's benchmark March wheat contract, which had stood 1.1% higher before the report, fell to close down 3.6%.
Harvest upgrades
The resilient inventory statistics reflected a range of unexpectedly strong data, with estimates for last year's US corn and soybean harvests upgraded to levels well above market forecasts.
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USDA US corn estimates, change from last and (from expectations)
Yield: 147.2 bushels per acre, +0.5 bpa, (+1.0 bpa)
Harvest: 12.358bn bushels, +48m bushels, (+93m bushels)
Stocks as of December 1: 9.64bn bushels, N/A, (+250m bushels)
End 2011-12 stocks: 846m bushels, -2m bushels, (+97m bushels) |
Inventories of the two crops as of the start of last month were higher than analysts had expected too, perhaps a reflection of the stronger harvests.
While the estimate for wheat stocks, as of December 1, was bang in line with forecasts, a stronger-than-expected wheat plantings number spoke of supplies ahead proving more generous than the market has factored in.
US farmers sowed nearly 42m acres with winter wheat, 1m acres above expectations, led by a rise in hard red winter wheat plantings.
"More acres were seeded this year due to higher prices and an acreage rebound in Kansas, Oklahoma, and Texas where dry conditions had limited 2011 planted acres," Karis Gutter, the acting US agriculture secretary, said.
Near-record supplies
Nor were hopes for world supplies dimmed substantially, despite the South American drought which Mr Gutter acknowledged had caused "substantial damage" to some corn crops, and limited soybean sowings and yields.
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USDA US soy estimates, change from last and (from expectations)
Yield: 41.5 bushels per acre, +0.2 bpa, (+0.1 bpa)
Harvest: 3.056bn bushels, +10m bushels, (+8m bushels)
Stocks as of December 1: 2.37bn bushels, N/A, (+5m bushels)
End 2011-12 stocks: 275m bushels, +45m bushels, (+42m bushels) |
The USDA lifted its estimate for world corn supplies at the end of the season by nearly 1m tonnes to 128.1m tonnes, with a 3.0m-tonne cut, to 26.0m tonnes, in the estimate for Argentina's output more than offset by improved ideas for last year's European Union, Ukraine and US harvests.
The estimate for world wheat supplies was lifted by 1.5m tonnes to 210.0m tonnes, on better ideas for Brazilian and Kazakh harvests, putting it less than 700,000 tonnes behind the record set 12 seasons ago.
A 1.1m-tonne downgrade, to 63.4m tonnes, in the estimate for world soybean inventories at the close of 2011-12, was marginally more than analysts had expected, and the only marginally bullish figure among the headline data.
'Bearishness across the board'
The data was viewed by GrainAnalyst trader Matt Pierce as heralding a "red letter day for bears", adding that he would not want to bet against "a limit lower move in corn, or soybeans for that matter".
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USDA US wheat estimates, change from last and (from expectations)
Stocks as of December 1: 1.66bn bushels, N/A, (equal to analyst forecasts)
End 2011-12 stocks: 870m bushels, -8m bushels, (+28m bushels)
Winter wheat sowings: 41.947m acres, N/A, (+1.014m acres)
Incl hard red winter wheat: 30.1m acres, N/A, +700,000 acres
And soft red winter wheat: 8.37m acres, N/A, +600,000 acres |
"I see bearishness across the board," he added.
However, at Teucrium Trading chief investment officer Sal Gilbertie said that the US balance sheet for, notably, corn was "still tight".
"The data was bearish because it differed so much from traders' expectations," he said.
"Our corn stocks are very small – we have 24.4 days' supply. That's historically very, very low."
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