Corn futures extended gains, contrasting with weak performances
in soybeans and wheat, after US farm officials, in a much-watched report, hiked
their estimate for use of the grain by livestock farmers, maintaining a picture
of tight supplies.
Chicago corn futures for May, the best-traded contract,
initially soared 2.0% after the US Department of Agriculture, in its monthly Wasde
crop report, added 100m bushels to its estimate for consumption of the grain as
feed in 2012-13.
The upgrade reflected in particular "continued expansion in poultry
production", the USDA said, besides a growing appeal by importers for US
supplies of rival grain sorghum, after a disappointing harvest in Australia.
Levels of placements of eggs for hatching into broiler
chickens have proved higher than initially expected, given elevated feed prices,
with prices of chicken meat too proving unexpectedly strong.
Indeed, separately, the USDA hiked by 618m pounds its
forecast for domestic broiler meat production in 2013.
"The data seem to show that we are not rationing feed demand
dramatically," Steve Kahler, chief operating officer at Teucrium Trading, an
issuer of crop-based exchange-traded products, said.
"We are looking at being left with tight corn stocks."
US bigger importer
The upgrade to the corn feed estimate more than offset a cut
to the estimate for US exports, by 75m bushels, a downgrade which commentators
had largely bargained on.
Wasde US crop forecasts, change on last and (on analyst expectations)
Corn end stocks: 632m bushels, unchanged, (-11m bushels)
Soybean end stocks: 125m bushels, unchanged, (+5m bushels)
Wheat end stocks: 716m bushels, +25m bushels, (+12m bushels)
Data for 2012-13
Indeed, with exports weak, reflecting what the USDA said was
"stronger expected competition from South American corn, and from
competitively-priced feed quality wheat", investors had expected officials to
lift their forecast for corn inventories at the close of 2012-13.The inventory estimate was in fact kept at 632m bushels –
and only then thanks to a more generous idea of US imports, raised to 125m
bushels (3.18m tonnes), a figure which would be, by a distance, the biggest on
Indeed, the US is now expected to import more corn over the
season than the likes of Algeria, China and Malaysia.
US exports, meanwhile, at 825m bushels (21.0m tonnes) will
be the lowest in more than 30 years.
Exports to hit a wall?
The strength in corn futures contrasted with weakness in wheat
- for which the US cut its estimate for exports and raised its estimate for
domestic inventories at the close of 2012-13 - and in soybeans.
Wasde world crop forecasts, change on last and (on analyst expectations)
Corn year-end inventories: 117.48m tonnes, -560,000 tonnes, (-313,000 tonnes)
Soybean end stocks: 60.21m tonnes, +90,000 tonnes (+762,000 tonnes)
Wheat end stocks: 178.23m tonnes, +1.5m tonnes, (+1.682m bushels)
The USDA surprised investors by not lifting its estimate for
soybean exports, despite the country having sold – in six months - more than 95%
of the shipments the department has forecast for the whole year.The department said: "US exports are expected to decline in
the months ahead as increased competition from a record South American soybean
crop limits additional US sales during the second half of the marketing year."
Mr Kahler said: "I think the USDA is waiting for more evidence
to see if it needs to make an adjustment."
By the time of the April Wasde, the department will also
have results from the latest quarterly stocks report, due at the end of this
month, which provides greater insight into domestic demand.
The dearth of adjustments to the soybean balance sheet left
the Wasde stocks number for the end of 2012-13 at 125m bushels, a higher figure
than analysts had expected, if still razor tight by historical standards.
Chicago soybean futures for March stood 0.4% lower at $14.67
½ a bushel an hour or so after the report's release, some 12 cents below their
level before the Wasde.
Wheat for May was 0.5% down at $6.91 ¼ a bushel, some 4
cents below pre-Wasde levels.
May corn stood at $6.99 ¾ a bushel, a gain of 1.2% on the day,
and up 5 cents since the report.