Bin-Busting Corn Supplies Spur Biggest Price Drop in Nine Months

U.S. corn supplies are even bigger than analysts expected, with prices tumbling the most since June on Tuesday after the government pegged reserves at a 28-year high.

Domestic stockpiles at 7.745 billion bushels as of March 1 were 11 percent higher than a year earlier, the U.S. Department of Agriculture said. That’s the most for the date since 1987. Analysts predicted a gain of 8.6 percent, on average. Adding to the supply woes, farmers are set to plant more corn than forecast, the agency said in a separate report.

Bigger global grain and oilseed supplies have helped drive world food costs to the lowest since 2010, with the Bloomberg Grains Subindex dropping 28 percent in the past year. A glut of corn, used in everything from animal feed to fuel, may signal lower costs for meat producers including Tyson Foods Inc. and for makers of sweeteners and ethanol such as Archer-Daniels-Midland Co.

“The supply bear market is well intact on corn,” Don Roose, the president of U.S. Commodities in West Des Moines, Iowa, said in telephone interview. The stockpile number shows “you’ve got a bigger cushion for adverse weather than you thought,” he said.

Corn futures for May delivery slumped 4.6 percent to close at $3.7625 a bushel on the Chicago Board of Trade on Tuesday, the biggest loss for a most-active contract since June 30. Aggregate trading more than doubled compared with the average in the past 100 days, according to data compiled by Bloomberg.

Record Crops

Futures traded at $3.785 on Wednesday, tumbling 25 percent in the past 12 months after farmers produced two consecutive years of record crops. The United Nations’ food index declined in February to the lowest since July 2010 amid bumper global harvests of wheat, corn and soybeans.

Even amid slumping corn prices, farmers will reduce acreage this year by less than analysts predicted. The grain will be sown on 89.199 million acres, compared with 90.597 million last year. Analysts surveyed by Bloomberg expected 88.834 million. The government in February forecast 89 million.

U.S. soybean inventories on March 1 were pegged by the government at 1.334 billion bushels, up from 994 million a year earlier and below the 1.348 billion expected by analysts.

The oilseed will be planted on a record 84.635 million acres, up 1.1 percent from 83.701 million last year, the USDA said. Analysts surveyed by Bloomberg expected seeding to rise to a record 85.949 million. The government in February forecast acreage to fall to 83.5 million.

Soybean futures in Chicago rose 0.6 percent to $9.7325 a bushel on Tuesday. The price fell as much as 1.7 percent and climbed 1.4 percent after the USDA reports. The oilseed was at $9.825 by 1:52 p.m. in Singapore on Wednesday.

‘Neutral’ Soybeans

“People are just trying to get their feet under themselves,” Phyllis Nystrom, branch manager for CHS Hedging in Inver Grove Heights, Minnesota, said in a telephone interview. “I don’t see anything overtly bullish. The stocks number was very neutral. There’s still a record amount of bean acres.”

Futures have slumped 34 percent in the past 12 months.

U.S. inventories of all classes of wheat on March 1 rose to 1.124 billion bushels from 1.057 billion a year earlier, the department said. Analysts expected 1.141 billion, on average.

Plantings of the grain will drop to 55.367 million acres from 56.822 million last year, the USDA said. Analysts forecast a decline to 55.67 million.

Wheat futures for May delivery fell 3.5 percent to $5.1175 a bushel on Tuesday. Prices were at $5.1675 on Wednesday, down 25 percent in the past 12 months.

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