Corn, wheat slide after USDA forecast; beans higher


The corn harvest will hit a record 13.935B bushels this year, says the USDA in its latest report, bringing U.S. stockpiles to 1.726B bushels, higher than analyst forecasts. Global stockpiles will jump 8% to 181.7M metric tons thanks in part to big crops in Ukraine and Brazil.

Analysts were taken by surprise by the big U.S. supply figure given farmer intentions of planting 4M fewer acres than last year, but the USDA is banking on normal weather, seeing the harvest at 165.3 bushels/acre, up 6.5 bushels from a year ago. "These are big, bearish numbers," says a futures broker, but "we still have to go out and produce the crop."

July corn is off 7 cents to $5.09 per bushel. CORN -2%

July wheat is off 7.25 cents to $7.28 per bushel after the USDA pegs global inventories at 187.4M metric tons, up from 186.5M for the current season. WEAT -0.8%

July soybeans are higher by 17.5 cents to $14.87 per bushel after the USDA cuts its stockpile estimate to 130M bushels from 135M. The agency sees production this crop year at 3.635B bushels from 3.289B a year ago. SOYB +0.5%

ETFs: JJG, GRU

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Comments (9)
  • David at Imperial Beach
    , contributor
    Comments (4381) | Send Message
     
    Interestingly, there was a divergence between Europe and US agricultural markets. US food prices rose, while European food prices fell. Such a divergence cannot be due to global ag commodity gluts or scarcities as much as differences between dollar and euro FOREX strengths.
    9 May 2014, 02:50 PM Reply Like
  • aeroguy48
    , contributor
    Comments (905) | Send Message
     
    When corn get back to 10 ears for a dollar, at Wal-Mart, instead of the now 4 for a $, then I will buy some, until then I guess I will keep using the food to get lower gas mileage.
    9 May 2014, 08:07 PM Reply Like
  • a_partlow
    , contributor
    Comments (44) | Send Message
     
    What are you talking about? You don't buy number two yellow at Walmart.
    10 May 2014, 03:48 PM Reply Like
  • psychological-dividends
    , contributor
    Comments (820) | Send Message
     
    This must be the politicians' argument for more ag subsidies.
    10 May 2014, 04:05 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13549) | Send Message
     
    Corn is still massively overpriced, propped up by ethanol subsidies that don't even lower the carbon footprint and drive up food prices. strangely enough this leads to even more over faming of corn exacerbating the effect and defeating the whole purpose of ethanol in the first place, to subsidize the corn lobbyists by pushing up prices with fake demand and making the public pay for it.

     

    Who knows, maybe their next plan is to make gas alternatives out of ground beef. After all, its hard to get less efficient than making corn into gas at over 2x the price of regular gasoline and the fuel you do get gets worse gas mileage.
    10 May 2014, 10:10 PM Reply Like
  • a_partlow
    , contributor
    Comments (44) | Send Message
     
    There are no ethanol subsidies. Only a blenders credit that goes to oil companies. Look it up. Also, ethanol does not take food out of the chain. Dried distilled grain, a byproduct of producing ethanol is fed to animals.
    11 May 2014, 09:37 AM Reply Like
  • aeroguy48
    , contributor
    Comments (905) | Send Message
     
    @ A_part, Mr. Moon Kil Woong, is what I am talking about. The distortion of corn prices due to government subsidies and dictates which cause the marketplace to inefficiently pool resources to comply with the governments mis-guided policies. Truth be know if corn for fuel mandates were to be eliminated gas would go back to 100% pure and corn prices would plumment~ AKA an efficient marketplace. Them maybe I could buy 10 ears of corn for a buck.
    11 May 2014, 11:37 AM Reply Like
  • a_partlow
    , contributor
    Comments (44) | Send Message
     
    There are no ethanol subsidies people.
    11 May 2014, 10:46 PM Reply Like
  • ParisJOM
    , contributor
    Comments (190) | Send Message
     
    Present corn market conditions are:

     

    - excellent growing conditions are near perfect

     

    - export demand is rather low

     

    - bumper corn crop is estimated by official sources and much of the media

     

    - the pork population has decreased significantly to to the hog diariah outbreak (USDA estimates 10% decline)

     

    - wheat has just seen largest decline in 20 years, but corn has declined even further relative wheat (in % terms) over a period of one year, over this same period soybeans have become very dear and appreciated significantly.

     

    All of this news is extremely bearish, and has driven July corn to 450 cents/bushel, representing an 18% decline over about 3 weeks.

     

    This appears to me to as if the market is pricing in all this favourable corn yield news as if there remains no more risk of any bullish new happening.

     

    My first assumption here is that the market has reacted strongly , and likely overeacted, to all this favourable news for corn yields and stocks.

     

    However, it seems to be reasonable to also assume that:

     

    - the porc population will weather the recent diariah outbreak and return to high levels (especially given the high hog prices, thus inciting production)

     

    - the El Nino weather developing may cause some dry spells this summer, causing moisutre concerns, and dimming yield prospects

     

    - livestock farmers will turn more to corn for feed, as the present soybean-corn spread is very wide, and making soybeans a much more costly feed choice.

     

    - chinese demand will pick up at these low prices.

     

    In sum, I think prety well if not all (oe more) bearish news has been priced in, and it will take but a small increase in demand or a small unfavourable weather event to boost corn prices very promptly.
    8 Jun 2014, 09:52 AM Reply Like
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