Bloomberg News

Wheat, Soybeans, Corn, Drop as USDA Boosts Inventory Forecasts

December 12, 2011

Dec. 9 (Bloomberg) -- Wheat and soybeans fell to the lowest in more than a year and corn declined after the U.S. government said global crop inventories will be larger than expected.

World wheat stockpiles before the 2012 harvest will total 208.52 million metric tons, 2.9 percent more than projected a month earlier and the highest since 2000, the U.S. Department of Agriculture said. Global soybean reserves will be 1.5 percent bigger than last month’s estimate and U.S. stockpiles will rise to a five-year high. World Corn supplies will be 4.6 percent higher. The outlook for the crops topped analysts’ forecasts.

“The world carryover projections were larger than expected and are negative for all three crops,” Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis, said in a telephone interview. “Prices will have to fall low enough to generate improved demand.”

Wheat futures for March delivery fell 0.2 percent to close at $5.96 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, reaching $5.84, the lowest since July 27, 2010. The grain has fallen 25 percent in 2011 as record global production reduced demand for U.S. supplies.

Soybean futures for January delivery dropped 2.3 percent to $11.07 a bushel on the CBOT, the biggest loss since Nov. 23. Earlier, the oilseed touched $11.0025, the lowest since Oct. 8, 2010. The commodity has dropped 21 percent this year.

Corn Falls

Corn futures for March delivery fell 1 percent to $5.9425 a bushel in Chicago, the largest drop since Dec. 2. The price has declined 5.5 percent this year.

Combined global wheat and feed-grain inventories outside of the U.S. will rise 3.5 percent from a year earlier to 321.09 million metric tons, the highest in two years, the USDA said.

China, the biggest producer of pork, will harvest 191.75 million tons of corn this year, the most-ever, up 8.2 percent from the previous record of 177.25 million set last year, the agency said. Reserve inventories may rise 6.6 percent to 57 million tons, the most since 2003. Two years ago, China became a net importer of corn for the first time since 1996.

“Total world supplies are in surplus and that will slow U.S. exports,” said Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago. “Confirmation of a record Chinese crop means they will not be back to buy any U.S. corn before next June.”

The USDA reduced its forecasts for cash prices for all three commodities. Soybeans will average $11.70 a bushel in the current marketing year, down from $12.60 estimated in November. The outlook for corn was cut 4.5 percent to $6.40, and wheat was reduced 1.4 percent to $7.30.

“Farmers are selling more corn and soybeans today in the cash markets, and that is adding some hedge pressure to the futures,” Grow said. “Farmers are getting uneasy about the declining trend in prices.”

The U.S. was the largest exporter of all three commodities in the marketing year that ended Sept. 30. Corn is the country’s biggest crop, valued at $66.7 billion in 2010, followed by soybeans, hay and wheat, government data show.

--Editors: Daniel Enoch, Steve Stroth.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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