Corn traders are the least bullish in seven months as U.S. farmers prepare to plant a record crop amid an outlook for drier Midwest weather in coming weeks.
Fourteen analysts surveyed by Bloomberg expect corn prices to rise next week, while 13 were bearish and a further four were neutral. Traders have predicted higher prices since reversing from a bearish outlook in September. Futures on the Chicago Board of Trade slid to a 10-month low on April 24, and are down 27 percent since reaching a record Aug. 10, as production prospects improved following the worst drought last year since the 1930s.
U.S. farmers in the largest producing states had planted 4 percent of their corn crops as of April 21, behind the five-year average of 16 percent, according to the U.S. Department of Agriculture. Areas of Iowa and Illinois, the biggest growers, had more than twice the normal amount of rain in the past 30 days, National Weather Service data show. The region will be mostly dry this weekend before seeing some showers early next week, Commodity Weather Group LLC said today. Conditions also should be dry during the second week of May, it said.
“The warmer, drier weather forecasts suggest much improved planting and lower prices,” said David Smoldt, a vice president for INTL FCStone Inc. in West Des Moines, Iowa. As long as the majority of crops are planted in the next month, “we won’t lose much yield potential this year.”
Corn for July delivery traded at $6.205 a bushel, heading for the fourth weekly drop in five weeks. The USDA said in February that U.S. production in the 2013-14 season may rise to a record 14.53 billion bushels, up 35 percent from the past year’s drought-reduced crop. Farmers will plant 97.282 million acres, the most since 1936, the agency said March 28.
Last year’s drought allowed much of this month’s rain to soak deep into the soils, replenishing depleted moisture for improved yield potential, said Mike Kavanaugh, the agronomy manager for St. Francisville, Illinois-based AgriGold Hybrids, which sells corn seeds in 13 states. The optimal time to plant corn without reducing yield potential is from April 20 to May 20 in most of the Midwest, he said.
Farmers can plant as much as 6 percent of their intended corn acreage per day in Illinois, when soil conditions are warm and dry, according to Darrel Good, an agricultural economist at the University of Illinois in Champaign. Northern and central parts of the state have seen record flooding along the Illinois and Des Plaines rivers after excess rain last week, National Weather Service data show.
Soybean traders were the most bearish in three weeks, with 16 expecting the oilseed to fall next week, while nine predicted an increase and seven were neutral, according to the Bloomberg survey. On April 24, the price fell to the lowest since June 18 on concern China’s demand would decline as the spread of bird flu threatened to reduce demand for poultry feed. The Asian country canceled 281,500 metric tons of U.S. sales previously made for delivery before Sept. 1, the USDA said yesterday.
Wheat traders were bearish for the first time since February, with 14 of 29 traders predicting a price decline.
Hedge funds are reducing bets on higher corn, soybean and wheat prices at the fastest pace since the Commodity Futures Trading Commission began collecting data in June 2006. Net-long positions in the three markets fell to 99,779 futures and options contracts as of April 16, down from a record 672,042 contracts the week ended Aug. 21.
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