Corn Futures Post Biggest Drop in Year as Soybeans Plunge

Corn futures capped the biggest decline in a year after the U.S. government said domestic stockpiles will be larger than forecast. Soybeans fell the most since 2009.

Corn inventories on June 1 in the U.S., the world’s biggest producer, reached 3.854 billion bushels, after production rose to a record last year, the Department of Agriculture said today. The average estimate of 26 analysts surveyed by Bloomberg was 3.723 billion. Stockpiles jumped 39 percent from 2.766 billion a year earlier with on-farm inventories seen rising 48 percent.

Prices fell 15 percent this quarter on forecasts for increasing supplies. The outlook for bigger crops has helped to keep global food costs in check, with the United Nations saying world food prices fell in May for the second straight month.

“Inventories were larger than expected and signal no shortfall in supplies ahead of the harvest this year,” Dale Durchholz, the senior market analyst for AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “Corn supplies are comfortable.”

Corn futures for December delivery fell 4.9 percent to settle at $4.2525 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest decline since June 28, 2013.

Demand for grain in livestock rations is slowing as the U.S. hog herd fell 4.7 percent from a year earlier to 62.128 million head on June 1, USDA data showed June 27. Animals intended for slaughter dropped 5.1 percent.

‘Bearish’ Supplies

“The USDA hog report gave the market a preview of the sluggish feed demand confirmed” by the inventories figures today, Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “We are looking at a bearish supply story without any weather problems this summer.”

Soybeans fell the most in five years as the USDA said farmers will plant more than analysts expected and June 1 inventories were larger than forecast.

Seedings will reach an all-time high of 84.839 million acres, up 11 percent from a year earlier. Analysts expected 82.213 million acres, according to a Bloomberg survey. The USDA said in March that growers intended to plant 81.493 million. Inventories on June 1 in the U.S., the world’s top grower, were 405 million bushels, larger than the 382 million estimated by analysts surveyed.

Corn Acres

“Certainly, we were all fearing for a record number, but this was way out of the range of expectations,” Bill Nelson, senior economist at Doane Advisory Services in St. Louis, said in a telephone interview. “We had the wet start to the corn planting season. In the end, that might have encouraged some farmers to switch from earlier intentions into soybeans.”

About 91.641 million acres were planted with corn, down from 91.691 million forecast in March, the USDA said, after surveying farmers this month. Analysts estimated 91.709 million acres, on average.

On the CBOT, soybean futures for November delivery tumbled 5.8 percent to $11.5725 a bushel, the biggest drop for a most-active contract since July 2009. Prices touched $11.515, the lowest since Jan. 12, 2012.

Farmers also were asked by the USDA about use of genetically modified seeds produced by Monsanto Co. and Dupont Co. About 94 percent of the total soybean acreage was planted with gene-engineered seeds this year, up from 93 percent year earlier, the government said. Planting of biotech corn seeds was estimated at 93 percent, up from 90 percent in 2013.

Wheat futures for September delivery fell 2.7 percent to $5.775 a bushel in Chicago.

All wheat planted acreage was forecast at 56.474 million, up from 56.156 million a year earlier, the USDA said. Traders surveyed by Bloomberg expected 55.777 million, on average.

To contact the reporters on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net; Megan Durisin in Chicago at mdurisin1@bloomberg.net

To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Patrick McKiernan

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