Global farmers will harvest the biggest grain and soybean crops ever this year, boosting food reserves to the highest since 2000, the U.S. government said. Corn, wheat and oilseed futures in Chicago slumped.
Combined production of the three crops will jump 9.6 percent to 1.952 billion metric tons, the biggest increase since 2004, the U.S. Department of Agriculture said today in a report. While lower prices will increase consumption, world stockpiles will jump 13 percent to 416 million tons, the highest since 2001, the agency said.
After the most-severe U.S. drought since the 1930s drove corn and soybean prices to record highs last year, grain and oilseed futures have plunged more than 20 percent, curbing food costs. Average U.S. cash-corn prices will fall 32 percent in the year that starts Sept. 1, while soy-based animal feed may drop 29 percent, boosting meat and milk production, the USDA said.
“We will have an extremely big global supply of grains and oilseeds this year, provided there are no serious weather problems this summer,” said Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois. “There is absolutely no reason for consumers to chase grain and soybeans at these high prices ahead of record harvests.”
Corn futures for July delivery slumped 1.9 percent to close at $6.3625 a bushel at 1:15 p.m. on the Chicago Board of Trade. This week, the price dropped 3.8 percent, the most in a month. The grain has declined 8.9 percent this year.
Wheat futures for July delivery fell 2.7 percent to $7.0425 a bushel. The price has dropped 9.5 percent this year. Soybean futures for July delivery dropped 0.7 percent to $13.99 a bushel. The price has tumbled 22 percent from a record in September.
The U.S. corn harvest will surge 31 percent to 14.14 billion bushels (359.2 million metric tons), the USDA said. Reserves on Aug. 31, 2014, will more than double to 2.004 billion bushels from a year earlier. Analysts in a Bloomberg survey expected 2.038 billion.
The U.S. soybean crop is projected at a record 3.39 billion bushels, up from 3.015 billion harvested a year earlier. Inventories on Aug. 31, 2014, will rise 265 million bushels from this year’s projection of 125 million, the smallest since 2004, the agency said.
Global rice production will rise 1.9 percent to a record 479.3 million tons, the fourth straight annual gain, the USDA said.
Corn is the biggest U.S. crop, followed by soybeans, hay and wheat, government data show.