Chicago | Reuters — U.S. corn futures on Monday closed above $5 per bushel for the first time since late August after a highly anticipated U.S. crop report revealed inventories were smaller than expected on March 1.
The market gained further support from U.S. Department of Agriculture data projecting that U.S. farmers will plant fewer acres of corn this spring than analysts had predicted.
The reduced plantings outlook combined with concerns about tightening supplies to fuel fears of potential production risks during the upcoming growing season. Traders had been expecting supplies to be more comfortable this year after a massive U.S. harvest in 2013.
“Based on today’s numbers, I don’t see carryout going up any,” said Jim Gerlach, president of A/C Trading. “If that’s the case, we’re going to need a decent crop this coming year to significantly grow corn stocks.”
Carryout is the amount of grain that will be left over at the end of the corn marketing year on Aug. 31.
Chicago Board of Trade May corn closed up 10 cents, or two per cent, at a seven-month high of $5.02 a bushel (all figures US$). The market soared 19 per cent during the quarter on a front-month continuation chart.
May soybeans surged 27-1/2 cents, or 1.9 per cent, to $14.64 per bushel on concerns about tightening supplies. May wheat edged up 1-3/4 cents, or 0.3 per cent, to $6.97-1/4 a bushel.
Commodity funds bought an estimated 20,000 corn contracts, 11,000 soybean contracts and were net even in wheat, traders said.
USDA ignited the rally when, in a quarterly grain stocks report, it said U.S. corn stockpiles were 7.006 billion bushels as of March 1, below analysts’ expectations for 7.099 billion bushels. Wheat stocks were 1.056 billion bushels, above analysts’ estimates for 1.042 billion.
Tighter carryouts seen
U.S. soybean stocks on March 1 were 992 million bushels, above analysts’ expectations for 989 million bushels. However, stocks were down from 998 million a year earlier.
Despite a large U.S. soy harvest last year, strong demand for U.S. crushing and for exports has kept supplies low. Traders bid up prices to encourage imports, said Mike Zuzolo, president of Global Commodity Analytics.
“We don’t have conclusive evidence that we have rationed enough demand yet, after today’s stocks report,” he said.
Following the release of Monday’s stocks data, the USDA will likely lower its 2013-14 U.S. corn carryout estimate by 50 million bushels in a monthly supply/demand report on April 9, said Terry Reilly, senior commodity analyst for Futures International.
The soybean carryout will likely drop by 10 to 15 million bushels in the April report, he said.
Record soy plantings
New-crop soybean futures stumbled as USDA projected that U.S. farmers will increase soybean plantings six per cent from last year to a record 81.5 million acres, according to USDA. Analysts had expected plantings of 81.1 million.
November soybeans lost 3-1/4 cents at $11.87-1/4 a bushel.
The government pegged corn plantings at 91.7 million acres, the smallest area since 2010, and below analysts’ expectations for 92.7 million. U.S. farmers are expected to switch acres to soybeans from corn following a nearly 40 per cent drop in corn prices since last summer.
— Tom Polansek reports on agriculture markets for Reuters from Chicago. Additional reporting for Reuters by Julie Ingwersen in Chicago, Manolo Serapio Jr. in Singapore and Sybille de La Hamaide in Paris.