U.S. grains: Corn drops after USDA pegs plantings above expectations

USDA forecasts largest U.S. corn acres in eight years

New-crop CBOT December 2020 corn with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — U.S. corn futures settled lower on Tuesday after the U.S. Department of Agriculture (USDA) forecast 2020 plantings at the largest in eight years, well above trade expectations, while soybeans firmed on a lower-than-anticipated acreage outlook.

A tighter-than-expected USDA quarterly corn stocks estimate limited losses, but most contracts notched life-of-contract lows after the anticipated government reports.

The outsized corn acreage forecast comes as numerous ethanol plants, users of more than a third of the U.S. crop, have slowed or halted production amid a steep drop in energy prices triggered largely by the coronavirus pandemic.

Corn futures ended the month down 7.5 per cent, the largest monthly break since August, while soybeans closed out March with a 0.8 per cent monthly drop. Wheat notched an 8.3 per cent monthly gain, its strongest since last May.

USDA, surveying about 80,000 U.S. farmers, pegged 2020 corn plantings at 96.99 million acres and soybean plantings at 83.51 million acres. Analysts had been expecting the report to show 94.328 million acres of corn and 84.865 million acres of soybeans planted this spring, according to a Reuters poll.

“It’s a 15 per cent larger crop, if you come back to trend yields. That’s a lot of corn to absorb, especially in a weak ethanol demand environment and a strong dollar situation,” said Bill Lapp, president of Advanced Economic Solutions.

USDA estimated corn stocks on March 1 at 7.95 billion bushels, soybean stocks at 2.25 billion bushels and wheat stocks at 1.41 billion bushels, all down from a year ago. Corn and wheat stocks were below the average trade estimate while soybeans were slightly above.

Chicago Board of Trade May corn futures settled 1/2 cent lower at $3.40-3/4 a bushel at the close, while new-crop December corn was down 2-1/4 cents at $3.57-1/2 a bushel after earlier hitting a contract low of $3.53-1/4 a bushel. All contracts from September 2020 and beyond set new contract lows.

May soybeans settled up 3-3/4 cents at $8.86 a bushel while new-crop November gained three cents to close at $8.77-1/2 a bushel.

CBOT May wheat settled down 3/4 cent at $5.68-3/4 a bushel.

“This is just the first shot on acres, but it is a high starting point for the corn,” said Charlie Sernatinger, global head of grain futures at ED+F Man Capital, said in a note to clients. “There will be a lot of screaming over how much we will pare down the corn surface area.”

— Reporting for Reuters by Karl Plume and Christopher Walljasper in Chicago; additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore.

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