Corn Leads Grain Plunge as U.S. Acreage Tops Estimates
Corn futures tumbled to a 32-month low, while soybeans and wheat fell to the cheapest in a year, after the government said U.S. farmers will plant more grain than forecast and the largest oilseed crop ever.
Planting of corn, the biggest domestic crop, jumped to 97.379 million acres, the most since 1936, the U.S. Department of Agriculture said today in a report. Analysts in a Bloomberg survey expected 95.431 million. Wheat acreage reached a four-year high of 56.53 million, and soybeans were sown on a record 77.728 million. Corn dropped for the seventh straight session, and wheat capped the longest slump since December 2009.
U.S. farmers, the world’s biggest growers of corn and soybeans, are forecast by the USDA to produce record harvests this year, while the United Nations predicts global wheat output will be the highest ever. That will cut costs for buyers including Archer-Daniels-Midland Co., the largest corn processor, and Tyson Foods Inc., while curbing food prices down 9.5 percent from a record in February 2011.
“Farmers planted more corn, soybeans and wheat than almost anyone expected after all the rain earlier this year,” Dale Durchholz, the senior analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview. “The U.S. crop potential is getting bigger, and that will keep the markets on the defensive and put farmers in a more aggressive selling mood.”
Corn futures for delivery in December tumbled 5.1 percent to close at $5.11 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest decline for the price after the harvest since March 28. The price touched $5.06, the lowest for the most-active contract since Oct. 8, 2010.
Soybean futures for November delivery fell 1.8 percent to $12.52 a bushel. Earlier, the oilseed touched $12.47, the lowest since June 4, 2012.
Wheat futures for September delivery slid 2.4 percent to $6.5775 a bushel. Earlier, the price touched $6.56, the lowest since June 19, 2012. The grain dropped for seven straight sessions.
Companies that use crops to make livestock feed, fuel and food will benefit from the slump in futures, said Brett Hundley, an analyst at Richmond, Virginia-based BB&T Capital Markets, a research firm that makes stock recommendations on agribusiness companies.
“Much bigger numbers for corn acres are going to filter their way through the food-supply chain,” Hundley said in a telephone interview. “It will lower potential costs for protein producers and corn-sweetener producers.”
Tyson climbed 1.8 percent to $25.68. The stock has advanced 32 percent this year.
Increased corn sowing will boost stockpiles that fell to the lowest in 16 years. Inventories on June 1 totaled 2.76 billion bushels, down 12 percent from the prior year and the lowest since 1997, the USDA said today in a separate report. Analysts forecast reserves at 2.862 billion bushels. In 2012, the most-severe drought since the 1930s cut production.
The premiums for July corn and soybean futures above the most-active contracts after the harvest surged to records after the USDA confirmed shrinking inventories, Roy Huckabay, an executive vice president at the Linn Group in Chicago, said in a telephone interview.
Today, the premiums surged 31 percent to $1.68 for corn and 14 percent to $3.13 for soybeans.
The increase in acreage and forecasts for no excessive rain or extreme heat in the U.S. will boost crop prospects, Huckabay said. Drier weather and warm temperatures in the next 10 days will aid plant development from Minnesota to Illinois, where some fields got more than three times the normal amount of rain in the past month, Commodity Weather Group LLC in Bethesda, Maryland,, said in a report.
About 65 percent of the corn was rated in good or excellent condition on June 23, up from 56 percent a year earlier, and 65 percent of soybeans earned top ratings versus 53 percent, the USDA said in a report this week.
“The market spreads are trying to slow demand for last year’s supply, while factoring in a big crop this year,” Huckabay said. “Corn and soybean supplies will be tight before what should be record crops this year. Weather looks wet with little heat and that means good yields.”
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