Corn Falls to 17-Month Low in Record Trading on Acreage Outlook

Updated on
  • USDA's planting estimate tops all estimates by analysts
  • Forecast seen as `shock to the system' amid high reserves

Corn futures tumbled to the lowest in 17 months after a U.S. government report showed that farmers plan to sow 93.6 million acres of the grain in 2016, exceeding all estimates by analysts and boosting prospects for higher supplies after the harvest.

Planting will rise 6.4 percent from a year earlier to the third-highest since 1944, according to a report Thursday by the U.S. Department of Agriculture. Farmers also told the government they intend to reduce soybean planting to 82.2 million acres from 82.65 million in 2015.

The increase in corn acreage “is mainly due to the expectation of higher returns in 2016 compared with other crops,” the USDA said.

“This is still a shock to the system when you couple it with the huge quarterly stocks that we’re sitting on,” Dean Heffta, a senior director at risk-management firm Water Street Solutions in Peoria, Illinois, said in a telephone interview.

Corn futures for May delivery tumbled 4.2 percent to close at $3.515 a bushel on the Chicago Board of Trade. Earlier, the price touched $3.475, the lowest since Oct. 21, 2014. In the first quarter, the price dropped 2 percent, the third straight decline and the longest slump since the end of 2013. The U.S. is the world’s top grower.

Record Volume

On Thursday, estimated aggregate trading rose to a record 895,022 contracts from the previous all-time high of 845,770 on June 30. Volume more than tripled compared with the 100-day average, according to data compiled by Bloomberg.

U.S. farmers are facing a drop in profit for the third straight year to $54.8 billion as persistent surpluses depress crop and livestock prices, the USDA said in February. The hard times follow an era of record profit that peaked at $123.3 billion in 2013, when rising global demand combined with a domestic drought that crimped production.

Ample harvests since then have boosted supplies of major U.S. crops. Corn inventories as of March 1 rose 0.8 percent to 7.81 billion bushels from a year earlier, the government said Thursday in a separate report. That’s the highest for this time of year since 1987. Analysts surveyed by Bloomberg expected 7.798 billion, on average.

  • Soybean futures for May delivery rose 0.2 percent to $9.1075 a bushel. Earlier, the price dropped as much as 1.4 percent. Aggregate trading was 90 percent above the 100-day average, according to Bloomberg data.
  • Soybean supplies on March 1 jumped 15 percent to 1.53 billion bushels, less than analysts estimated.
  • Wheat futures for May delivery rose 2 percent to $4.735 a bushel, the biggest gain since March 3. Trading was 79 percent above the 100-day average.
  • Wheat reserves rose 20 percent to 1.37 billion bushels, more than analysts expected.
  • Total U.S. wheat planted for harvest in 2016 was estimated at 49.559 million acres, the USDA said, down from 54.644 million last year and trailing the lowest forecast in the Bloomberg survey.
  • Corn is the most valuable U.S. crop, followed by soybeans, hay and wheat, USDA data show.
  • Cotton acreage was projected at 9.56 million acres, 11 percent more than in 2015.