GRAINS-Corn drops 2 percent, soy slides on big USDA stocks view

* USDA pegs U.S. corn, soybean stocks above trade
    * Huge USDA world production, stocks outlook pressures wheat
    * Attention turns to improving U.S. planting weather

 (Updates with closing prices, weekly performance, fund selling
    By Karl Plume
    CHICAGO, May 10 (Reuters) - U.S. corn futures fell about 2
percent on Friday after the government forecast a record crop
that would bolster U.S. stocks to more than 2 billion bushels at
the end of next season, above trade expectations, despite
reduced yields due to late planting.
    Soybean futures slid modestly, halting a three-day rally, as
the U.S. Agriculture Department said a record-large U.S. harvest would more than double supplies of the oilseed next season after three straight years of tight supplies. Wheat prices dropped nearly 3 percent in the steepest drop in almost four weeks as the USDA forecast global supplies well above trade expectations and on spillover pressure from sinking corn. Although grain stocks in the United States remained very tight, investors were increasingly focusing on the likelihood that U.S. production would handily recover from the worst U.S. drought since the 1930s last summer. "We've certainly got some tightness in old-crop corn and soybeans, but with each day that passes the market is getting more comfortable with that," said Brian Basting, analyst at Advance Trading in Bloomington, Illinois. "The combination of the USDA numbers and some better planting weather prospects next week are enough to offset Thursday's gains," he said. Drier weather by the weekend into early next week will boost U.S. corn plantings that have fallen to the slowest pace in nearly three decades, said John Dee, meteorologist for Global Weather Monitoring. In its first projection of the fall harvest and 2013/14
balance sheets, USDA said the corn crop would be a record 14.14 billion bushels despite a late start to the planting season that will lower yields. U.S. corn ending stocks for 2013/14 would hit 2.004 billion bushels, USDA said, nearly triple the 759 million forecast for the Aug. 31 end of this marketing year. The forecast was also above the trade estimate for 1.993 billion and the highest in nine years. U.S. soybean production was projected at a record 3.390 billion bushels with 2013/14 end stocks more than doubling to 265 million bushels from the 125 million estimated for the end of this season. The forecast was above trade expectations for 236 million bushels. "The ending stocks figure is a huge number for corn and a big number for soybeans, above what the trade was expecting," said Brian Hoops, president of Midwest Market Solutions. "The trade has had a bearish reaction to it. There is nothing in this report to say it's bullish." Chicago Board of Trade July corn fell 12-1/2 cents, or 1.9 percent, to $6.36-1/4 a bushel and new-crop December fell 12 cents, or 2.2 percent, to $5.29-1/2 a bushel. In the week, the July contract dropped 3.8 percent, the most in five weeks, and December shed 4.3 percent, the most in six weeks.
CBOT July soybeans fell 9-3/4 cents, or 0.7 percent, to $13.99 a bushel on Friday but the contract ended up 0.8 percent in the week. New-crop November shed 13-1/2 cents to settle at $12.05-1/2, a 1.1 percent daily drop and a 1.3 percent weekly decline. CBOT July wheat futures dropped 19-1/4 cents, or 2.7 percent, to $7.04-1/4 a bushel. The contract was down 2.3 percent on the week, its third drop in the past four weeks. Wheat was pressured by USDA's larger-than-expected 2013/14 world stocks forecast of 186.38 million tonnes, about 2 million above pre-report projections, and a massive 45-million-tonne year-on-year increase in global production amid a rebound in output from the Black Sea region. Commodity funds sold a net 11,000 corn contracts on the day, as well as 5,000 contracts each of soybeans and wheat, trade sources estimated. Prices at 2:00 p.m. CDT (1900 GMT) LAST NET PCT YTD CHG CHG CHG CBOT corn 636.25 -12.50 -1.9% -1.6% CBOT soy 1399.00 -9.75 -0.7% 16.7% CBOT meal 406.80 -6.70 -1.6% 31.5% CBOT soyoil 49.23 0.01 0.0% -5.5% CBOT wheat 704.25 -19.25 -2.7% 7.9% CBOT rice 1525.00 -9.00 -0.6% 4.4% EU wheat 208.75 -2.25 -1.1% 3.1% US crude 95.84 -0.56 -0.6% -3.0% Dow Jones 15,073 -9 -0.1% 23.4% Gold 1438.00 -19.70 -1.4% -8.0% Euro/dollar 1.2981 -0.006 -0.5% 0.3% Dollar Index 83.1470 0.3540 0.4% 3.7% Baltic Freight 884 -5 -0.6% -49.1% (Editing by Peter Galloway and James Dalgleish)

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