Bloomberg News

Corn Traders Most Bearish Since 2010 on U.S. Production Outlook

July 05, 2013

Corn traders are the most bearish since 2010 as prospects improve for a rebound in global supplies after U.S. farmers planted the most acres since 1936.

Fifteen of 25 analysts surveyed by Bloomberg expect prices to fall next week, with six bullish and four neutral, the largest proportion of bears since November 2010. The U.S. Department of Agriculture on June 28 raised its estimate for national corn planting to 97.379 million acres (39.4 million hectares), even as wet weather slowed fieldwork in April and May.

Corn crop conditions in the U.S., the world’s biggest grower and exporter, improved for a third week through June 30 as the weather turned warmer and drier, government data show. U.S. farmers may harvest a record 14.005 billion bushels, helping boost global production to an all-time high of 355.7 million metric tons, 12 percent more than a year earlier, when dry weather curbed output from the U.S. to eastern Europe, the USDA estimates.

“Weather is generally good for the crops,” said Dale Durchholz, a senior market adviser at Agrivisor LLC in Bloomington, Illinois. The USDA’s projections for production and acreage “are still a drag on the market,” he said.

Improving prospects for supplies pushed corn futures on July 2 below $5 a bushel on the Chicago Board of Trade for the first time since October 2010. The most-active contract is down 28 percent this year, the worst performance after silver among the 24 commodities in the Standard & Poor’s GSCI gauge of raw materials. The GSCI is down 2.9 percent this year, while the MSCI All-Country World Index of equities rose 5.6 percent.

Ukrainian Harvest

Production also may rebound in the European Union, with corn output pegged at 70.02 million tons, up 17 percent from the previous season, the European Commission said yesterday. The London-based International Grains Council raised its outlook for global corn production on July 1 to 946 million tons because of improving prospects for crops in Ukraine and other former Soviet Union countries.

Soybean traders were bearish for a third week, with 13 analysts surveyed by Bloomberg predicting prices will fall next week. A further 10 were bullish and one was neutral. The USDA predicts U.S. farmers planted the oilseed on a record 77.811 million acres.

Wheat traders were bearish for a fifth week, the longest negative streak since the Bloomberg survey began in November.

Global wheat production may climb to 683.1 million tons, up 4.2 percent from a year earlier and 1 million tons more than previously predicted, the IGC said July 1. U.S. farmers had harvested 43 percent of their winter-wheat crops as of June 30, according to the USDA, and the harvest will begin in Europe and Russia in the next month.

“Things in the Northern Hemisphere are looking fairly positive,” Darren Cooper, an economist at the IGC in London, said in a telephone interview July 3. “There’s nothing so far on the horizon to suggest crop downgrades, and things in the Black Sea are looking good.”

To contact the reporters on this story: Whitney McFerron in London at wmcferron1@bloomberg.net; Tony C. Dreibus in Chicago at tdreibus@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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