U.S. grains: Corn tumbles on USDA forecast for rising global supplies

Chicago | Reuters — U.S. corn futures fell 1.7 per cent on Friday, retreating from a one-month high after the U.S. Department of Agriculture raised its forecasts of global inventories above trade expectations, traders said.

Wheat also fell, but nearby soybean futures surged after the USDA in a monthly supply/demand report cut its forecast of old-crop U.S. ending stocks more than expected.

At the Chicago Board of Trade, July corn settled down nine cents at $5.07-1/2 per bushel after touching a one-month top at $5.22-3/4 (all figures US$).

July soybeans ended up 17-1/2 cents at $14.87 a bushel, while July wheat finished down 12-3/4 cents at $7.22-1/2 a bushel.

Corn declined after USDA raised its forecast for 2013-14 world ending stocks of the grain to 168.42 million tonnes, up 10 million from April and above a range of estimates.

The government projected 2014-15 world corn ending stocks at 181.73 million tonnes, the most since 1999-2000.

“The world carry-out was a killer. Those are big world numbers,” said Dan Cekander, an analyst with Newedge USA.

The corn market rallied briefly in volatile moves shortly after the USDA data was released, supported by the government lowering its U.S. 2013-14 corn ending stocks forecast to 1.146 billion bushels, below a range of trade estimates.

But “the global ending stocks are trumping the tight U.S. ending stocks,” said Mike Zuzolo, president of Global Commodity Analytics & Consulting.

Improving weather for planting in the U.S. Midwest also added pressure. Some traders expect that USDA might report planting progress at around 60 per cent in its next weekly progress report on Monday, up from 29 percent as of May 4.

“I am looking at weather maps for next two weeks, and there is just better weather for this northern Corn Belt,” Cekander said.

Soybeans up, led by nearbys

Soybeans advanced, led by nearby months, after the USDA lowered its forecast of 2013-14 U.S. soy ending stocks to 130 million bushels, below an average of analyst estimates for 134 million.

“You have old-crop supplies that are razor tight on soybeans. We were relying on the new-crop numbers to carry us through, but we have to make sure that we get a crop,” said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

Benchmark July soybeans gained one per cent for the week.

Gains were limited in back months after the USDA forecast that U.S. soy ending stocks would surge to 330 million bushels at the end of 2014-15. CBOT new-crop November soybeans settled up 2-1/4 cents at $12.26-1/4 a bushel.

Wheat sets back

CBOT wheat futures fell as investors took profits after USDA’s monthly report offered no major surprises.

Most-active CBOT July wheat sagged for a third straight session after reaching its highest level since June 2013 on Tuesday. Front-month wheat set back from its highest level in more than a year on continuous charts.

Yet for the week, July wheat gained 6-1/2 cents, or 0.9 per cent, buoyed by searing heat this week that stressed crops in the U.S. Plains hard red winter wheat belt.

In its first estimates of the 2014 harvest, the USDA pegged U.S. winter wheat production at 1.403 billion bushels and the hard red winter wheat crop at 746 million bushels, roughly in line with trade expectations.

Traders continue to monitor developments in Ukraine, a key shipper of wheat and corn, where pro-Moscow rebels plan a referendum on Sunday.

— Julie Ingwersen is a Reuters correspondent covering ag commodity markets from Chicago. Additional reporting for Reuters by Gus Trompiz in Paris and Naveen Thukral in Singapore.

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