Corn Plunges Most Since November, Wheat Falls as U.S. Reports Acreage Gain

Corn futures tumbled the most since November and wheat had the biggest plunge since January 2009 as the U.S. government reported grain acreage and inventories that topped estimates by analysts. Soybeans fell, and rice rose.

U.S. farmers planted 92.282 million acres of corn this year, 1.8 percent more than projected by analysts in a Bloomberg News survey, and the second-highest since 1944, the Department of Agriculture said today. Stockpiles as of June 1 were 3.67 billion bushels, 12 percent higher than forecast.

“The USDA again surprised the market,” said Chad Henderson, a market analyst for Prime Agricultural Consultants Inc. in Brookfield, Wisconsin. “Rising acreage will add 200 million bushels to this year’s corn crop. Demand rationing has taken place, and supplies are much more comfortable for 2012.”

Corn futures for December delivery, the most-active by open interest, slid by the exchange limit of 30 cents, or 4.6 percent, to settle at $6.205 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest drop since Nov. 16. The grain has jumped 66 percent in the past year on surging demand from ethanol makers and livestock farms.

Corn futures for July delivery, the contract closest to expiration, fell 69 cents, or 9.9 percent, to $6.29.

Food, Fuel

Declining corn prices may reduce expenses for meat producers including Tyson Foods Inc. and makers of grain-based ethanol such as Poet LLC. Bigger grain supplies might ease global food-inflation concerns after prices measured by the United Nations climbed to a record in February.

Worldwide wheat and corn harvests will be bigger than expected because of an improving outlook in the U.S. and China, the International Grains Council said today in a report.

Increased U.S. acreage “helps to ease the global grain supply shortage on paper,” said Michael Swanson, a senior agricultural economist at Wells Fargo & Co. in Minneapolis. “Physically, we have to harvest those acres and have good growing weather the remainder of the season.”

The U.S. is the world’s leading exporter of wheat, corn and soybeans.

U.S. farmers boosted corn seeding even as wet weather delayed fieldwork from Ohio to North Dakota. On June 10, corn futures for July delivery, the most-active at the time, rose to a record $7.9975, spurring growers to plant through June, instead of switching to soybeans, which have a shorter season. Corn sowing typically is finished in May.

Four-State Review

The USDA said today in a statement that it plans to survey farmers next month in Montana, Minnesota and North and South Dakota on acreage planted for corn, soybeans and durum and spring wheat.

“A large percentage of acres remained to be planted” in those states following the survey in the first half of June, the USDA said.

“If anything, we might see acreage come down a little from here,” said Mike O’Dea, a risk-management consultant at INTL FCStone in Kansas City, Missouri. “Today, the market is reacting to what’s in front of us.”

Farmers planted 13.627 million acres of spring wheat, 2.6 percent above estimates by analysts, the USDA said. U.S. inventories as of June 1 totaled 861 million bushels, topping forecasts by 4.6 percent.

Wheat futures for September delivery tumbled by the CBOT limit of 60 cents, or 8.9 percent, to $6.1425 a bushel, the lowest for a most-active contract since July 29. The decline was the biggest since Jan. 12, 2009. The grain has climbed 28 percent in the past year after adverse weather reduced global crop prospects.

‘Wild Ride’

On the Kansas City Board of Trade and the Minneapolis Grain Exchange, wheat futures dropped as much as the exchange limits of 60 cents.

Futures had “a wild ride,” said Carolyn Farndell, a senior commodity associate at RBC Wealth Management in Minneapolis. Wheat “stocks were higher than expected, they did lower the spring-wheat acreage, and there’s also been some talk circulating that the winter crop is coming in better than expected,” she said.

Soybean futures for November delivery dropped 29 cents, or 2.2 percent, to $12.94 a bushel on the CBOT. The price has climbed 43 percent in the past year.

Planting dropped to 75.208 million acres, less than analysts expected and below the 76.609 million estimated in March, as farmers switched to corn, the USDA said. Stockpiles as of June 1 were 619 million bushels, 4.6 percent more than forecast and above year-earlier supplies.

‘Stocks Trump Acres’

“The acreage numbers are positive, but we think the stocks trump acres,” sending futures lower, said Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa.

Rice futures for September delivery rose by the CBOT limit of 50 cents, or 3.5 percent, to $14.845 per 100 pounds. The price has gained 53 percent in the past 12 months.

U.S. rice planting totaled 2.676 million acres, down 26 percent from a year earlier, the government said today.

In the second quarter, wheat in Chicago dropped 20 percent, corn was down 10 percent and soybeans declined 8.2 percent. Rice gained 6.1 percent.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials dropped almost 6 percent in the quarter, the most since the end of 2008. A faltering global economy has damped demand for commodities. Today, a government report showed more Americans than forecast filed applications for unemployment benefits last week, indicating little progress in jobs recovery.

The U.S. Federal Reserve’s second round of quantitative easing, also known as QE2, concludes today.

Corn is the largest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, government figures show. Wheat is the fourth-largest at $13 billion, behind hay.

To contact the reporters on this story: Whitney McFerron in Chicago at wmcferron1@bloomberg.net; Jeff Wilson in Chicago at jwilson29@bloomberg.net.

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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