Corn led a slide in grain futures after the US government, in its first detailed estimates for 2011-12, forecast domestic supplies of major crops rebuilding more significantly than investors had expected.

Corn futures plunged the maximum allowed by Chicago exchange limits after the US Department of Agriculture forecast domestic inventories of the grain ending next season at 900m bushels, some 90m bushels more than analysts had pencilled in.

Chicago wheat for July tumbled 4.2% to $7.65 a bushel for July delivery, with soybeans easing 1.2% to $13.22 a bushel.

The declines followed the release of the USDA's latest much-watched Wasde report, which revealed weakening hopes for American crop exports as high prices deter buyers in the near-term, with production increases soft demand in 2011-12.

'Record foreign crop'

The higher-than expected estimate for US corn stocks reflected a downgraded estimate for shipments this season, followed by a decline next season thanks to "larger foreign supplies" of the grain, with the harvest in other producers, such as Argentina, China and Mexico, to hit a record 525m tonnes.

European Union corn imports will tumble by 2.5m tonnes to 4.0m tonnes, reflecting better hopes for the region's own harvest as sowings "rebound from last year's price-driven reduction that led to the planting of other crops such as wheat and rapeseed".

The estimate for US wheat inventories at the close of 2011-12 was, at 702m bushels, also well ahead of market forecasts, and put down to "increasing competition" in trade as Black Sea production and exports rebound from last year's drought-depressed levels.

The forecast for US soybean stocks for this season came in marginally above forecasts, a difference again down to softened export hopes, with the estimate for China's imports slashed by 2.5m tonnes to 54.5m tonnes. 

Weather support? 

The data were viewed as bearish by analysts, with US Commodities saying "the bottom line is that world production is growing and this along with the higher prices is cutting demand on exports on all grains".

Benson Quinn Commodities said that the estimates "still do not leave a lot of wiggle room if production issues arise in the US for soybeans and corn and globally for wheat".

"We could see a sharply lower opening but trade could stabilise if there are any changes in US weather outlook for next week."

At PitGuru, Matthew Pierce urged caution over selling, saying an estimate of 92.2m acres for US corn plantings was "a pipe dream".

"This report appears bearish but I feel it is a trap," he said.

Record crops

Other surprises in the report included a weak estimate, of 500,000 tonnes, for China's corn imports next season, lower than the multi-million-tonne estimates forecast by a number of analysts who have expressed doubts over data showing the country has ample stocks.

The estimate for the newly-harvested Brazilian soybean crop was edged 1.0m tonnes higher to 73.0m tonnes, a figure expected to be nearly matched next season.

And, in cotton, India is believed set for a record harvest of 127.0m bales, helped by an increase in the sowings currently underway and forecasts of a "normal" monsoon.