Corn futures plunged 6% to a 10-month low, dragging wheat down a similar amount, after the US found an extra 200m bushels of the grain, easing fears that buyers would need to pay up to  secure supplies.

Corn for December tumbled the exchange maximum of $0.40 a bushel to $5.92 ½ a bushel in Chicago, a 2011 low for a spot contract, after the US Department of Agriculture pegged domestic corn stocks as the start of this month at 1.13bn bushels.

And it indicated that the high corn prices over the summer, which in June took corn to a record high of $7.99 ¾ a bushel, had been more effective than rationing demand than analysts had thought, meaning buyers now faced less aggressive competition for supplies.

Indeed, broker US Commodities said that, with the data showing more than 200m bushels (5.2m tonnes) of extra corn than had been thought, the report "now cushions the need to ration 400m bushels" over 2011-12, as official data earlier in the month had indicated.

'Simply shut bulls down'

The data stunned the market, with GrainAnalyst trader Matthew Pierce, terming them "ragingly bearish", adding that the "USDA simply shut bulls down".

Even so, the extent of the plunge in corn futures took him off guard.

"How can anyone justify a price level sub-$6.00 a bushel with problems still persisting in Argentina and Brazil?" he asked, a reference to the dry weather weakening prospects for the third and fourth ranked producer of the grain.

But US Commodities proposed that prices of $5.50-6.00 a bushel in December corn may be needed to tempt corn consumers back to the market, especially with Ukraine corn being sold more cheaply by, until Friday, $0.75 a bushel.

'Excessively wet conditions lingered'

The collapse in corn prices undermined other corps too, notably Chicago wheat, which also plunged 6% in early deals, to a two-month low of $6.05 a bushel at one point, even though USDA data was considered more neutral for the grain.

The downgrade reflected weaker hopes for spring wheat, reflecting disappointing sowings and lower yields of what was planted.

"The excessively wet conditions lingered into early summer and eventually reduced the total acres available for planting in North Dakota and Montana," the USDA said.

"Yields are below the previous year's level in all states except Idaho, Oregon, and Washington," the department added, cutting by 4.2 bushels an acre to 38.3 bushels an acre its forecast for spring wheat.

Hard red spring wheat, the type traded in Minneapolis, suffered particularly, with a cut in output to 405m bushels.

Dragged lower 

This revision at least slowed the decline in Minneapolis spring wheat futures, with the December lot falling a modest 0.4%.

Losses of 3% were seen in European wheat contracts.

Back in Chicago, soybeans lost 4.2%, despite being given some shield by US stocks data which, in showing inventories 10m bushels smaller than the market had expected, were viewed, in isolation, as modestly helpful to prices.