USA: Corn prices tumble on news of larger-than-expected domestic stockpiles and spring plantings

U.S. corn prices tumbled on March 31 after federal analysts estimated larger-than-expected domestic stockpiles and spring plantings of the grain, The Wall Street Journal reported.

The U.S. Agriculture Department report also helped drive down wheat-futures prices, while soybeans climbed as storage and planting estimates for the oilseed came in below analysts’ forecasts.

The USDA said domestic corn stockpiles on March 1 totaled 7.75 billion bushels, surpassing analysts’ expectations for 7.63 billion bushels. That figure was 11% higher than stockpiles last March, due in part to record corn production last year.

Growers in 2014 harvested 14.22 billion bushels of corn after favorable weather conditions during the growing season boosted yields. Analysts said the report suggested that use of the grain by domestic livestock farmers in the last quarter also may have been lower than expected as producers substituted products like dried distillers’ grains—a co-product of corn ethanol—into feed for cattle and pigs.

The USDA’s projection for planted acres of corn “was a bit of a surprise,” said John Kleist, director of research with brokerage firm EBOT Trading LLC.

Corn for May delivery declined 18.25 cents, or 4.6%, to $3.7625 a bushel at the Chicago Board of Trade.

U.S. farmers increasingly have been planting more soybeans in recent years, shifting away from corn amid sharply falling prices for the grain.

The USDA on March 31 predicted U.S. growers would seed 89.2 million acres with corn this year. That is down from 90.6 million in 2014, but higher than analysts’ forecasts for 88.7 million.

Analysts cautioned the USDA may revise its corn-acreage estimates lower in the months ahead, as deflated prices spur more farmers to cede fields to other crops like soybeans, which offer better returns for some growers this year. Rain-delayed planting in the southeastern portion of the U.S. Corn Belt also may lead to fewer corn acres. “The acreage report may already be outdated,” said Dave Marshall, a farm-marketing adviser at TFCG LLC in Nashville, Ill.

Federal forecasters also said soybean planting would continue to grow, but not as much as expected. U.S. growers will seed 84.6 million acres of soybeans in 2015, a second record in a row, up 1.1% from last year but below analysts’ forecast of 85.9 million acres.

Soybean prices got a boost from slightly lower-than-expected growth in inventories, too. The USDA said stockpiles of the oilseeds at the start of the month totaled 1.33 billion bushels, up 34% from a year earlier, but less than the 1.34 billion bushels analysts anticipated.

That figure signaled export demand might be more resilient than thought despite a sharply stronger dollar, said Todd Hultman, analyst at agricultural-information provider Telvent DTN LLC. “It’s China’s appetite,” he said. “They want more protein in the diet, and that means they need more soybeans and meal to feed livestock to produce meat on the table.”

CBOT May soybean futures gained 5.5 cents, or 0.6%, to $9.7325 a bushel.

Wheat futures dropped as analysts said the USDA’s projection for larger stockpiles versus a year earlier reflected weak demand among overseas buyers. A robust U.S. dollar and cheaper supplies on offer from rival producers in Europe have discouraged foreign importers from seeking U.S. supplies of the grain this season. Plunging corn prices also weighed on prices for the grain, as the two are often used as substitutes in animal feed.

About 1.12 billion bushels of wheat were in storage on March 1, up from last year’s 1.06 billion, the USDA said. Analysts had expected 1.143 billion.

Wheat planting will total 55.4 million acres, down from 56.82 million last year, according to the USDA. Analysts had forecast plantings of 55.61 million acres. “The demand situation has not straightened out,” Mr. Kleist said.

May wheat futures fell 18.5 cents, or 3.5%, to $5.1175 a bushel.

01 April, 2015