WASHINGTON, March 28 (Reuters) -
U.S. corn inventories were larger than expected as of March 1, easing a
near-term supply crunch ahead of a potentially record-setting crop that will be
planted in coming weeks, the government said on Thursday.
In a pair of reports, the
Agriculture Department said the corn stockpile halfway through the marketing
year was 8 percent larger than traders expected. Meanwhile, corn plantings
would be the largest since 1936 at 97.3 million acres, although roughly in line
with expectations.
In Chicago, corn futures prices plummeted on the bearish data, dropping their 40 cent per bushel limit.
Options values suggested a decline of another 18 cents. Soybeans fell by nearly 4 percent and wheat by 6 percent.
U.S. corn prices have been at record
highs this season following the worst drought since 1934.
"The higher prices really did
more damage to demand than people wanted to believe," said Sterling Smith,
futures specialist at Citigroup, referring to the corn stockpile.
Plantings of soybeans were projected
to be smaller than expected at 77.126 million acres, perhaps the only bullish
surprise in Thursday's highly anticipated reports.
Some 5.399 billion bushels of corn
were in U.S. bins on March 1, down 10 percent from one year ago, according to
USDA. The figure was well above even the highest estimate in a Reuters survey
of traders and analysts conducted this week.
"The corn stocks were off the
charts bearish," said Charlie Sernatinger of ABN AMRO.
Although corn and soybean stocks
were larger than expected, three years of declining production have depleted
supplies and leave little leeway for a bad harvest. March 1 stocks for both
crops were the smallest March 1 total since 2004.
USDA showed that corn disappearance
for the Dec-Feb quarter tumbled 27 percent from a year earlier. USDA chief
economist Joe Glauber said the figures implied the smallest corn consumption
for that period since 2002. "We're going to be looking at that,"
Glauber told USDA's radio service.
"Second quarter feed use must
have crumbled," said Rich Nelson, research director at Allendale Inc.
"The trade had too-high estimates for feed use because of the first
quarter numbers. The first-quarter use was artificially high due to the early
August harvest,"
Another reason for falling corn
demand has been a slowdown in ethanol production, now running about 10 percent
below the 13.8 billion gallon federal target for 2013.
"We've seen a bit of slowness
in the ethanol production and that allowed corn stocks to grow a little bit
along with the really sloppy and slow export sales," Smith said.
SOME GUESS THAT 2012 SOYBEAN CROP
WAS BIGGER
Soybean stocks of 999 million
bushels were 7 percent larger than the average trade guess, and also topped
even the most bearish forecast.
"The surprising March 1 soybean
stocks implies the 2012 U.S. soybean crop was understated by 35 to 50 million
bushels," said Terry Reilly of Futures International.
Wheat stocks, at 1.234 billion
bushels, were 5 percent larger than expected.
Farmers intend to plant 97.282
million acres of corn, their most widely grown and most valuable crop, USDA
said.
Plantings would be the highest since
1936, and assuming normal weather and yields would result in record-setting
crop of 14.6 billion bushels, according to Reuters calculations.
Soybean plantings of 77.126 million
bushels would be down fractionally from last year and 2 percent below trade
expectations. A record crop of 3.4 billion bushels was still possible with
normal weather and yields.
Wheat growers indicated sowings of
56.440 million acres, up 3 percent from last year and in line with
expectations. Persistent drought in the central and southern Plains was
expected to bring lower yields and a smaller crop than in 2012. A cold spell at
the start of this week also may have damaged wheat in parts of Kansas,
Oklahoma, Texas and Colorado.
The wheat crop could total 2.1
billion bushels, based on USDA projections of yields and abandonment.
Overall, farmers intend to plant
roughly the same amount of land to the eight major crops as last year. Corn and
soybean sowings will be little changed, while cotton loses ground to sorghum, a
drought-hardy feed grain, in states like Texas.
Sorghum plantings were forecast to
be up 22 percent on the year while oats acreage would expand modestly. Rice
area would drop by 3 percent, USDA said.
Some analysts believe final soybean
plantings will be larger than growers indicate because of cold weather as the
planting season nears. At the margins farmers switch to soybeans when they feel
the time is passing to plant for ideal corn yields.
Growers said they would plant 10
million acres of cotton, down 19 percent from last year. New York cotton
futures rose on the outlook for a smaller crop.
With a U.S. sugar surplus looming,
farmers said they would reduce plantings of sugar beets by 2 percent. A month
ago, however, USDA projected a 9 percent drop in sugar beet area because of low
sugar prices.
