February 29, 2012

US corn futures decline on record output forecast

For the first time in four sessions, corn futures fell on expectations that growers in the US will raise output to 15% on record level.

US corn production may jump to 14.27 billion bushels in 2012-13, the most ever, as seedings increase to 94 million acres, the most since 1944, the USDA said in a report on February 24. Yields may average 164 bushels an acre, the USDA said. About 4.95 billion bushels will be used to make ethanol, the fewest in three years, according to the report.

"Those are egregiously bearish numbers," economist Dennis Gartman said in his daily Gartman Letter. "Nonetheless, corn futures have held quite well following that bearish news."

Corn for May delivery fell 0.8% to US$6.3875 a bushel by 1:38 p.m. London time on the CBOT. The price last week gained 2.1%.

Stockpiles of corn in the US, the world's largest grower and exporter, may double to 1.62 billion bushels in the 2012-13 marketing year from 801 million bushels in the prior year, as demand from ethanol producers slows, the USDA said.

Wheat for May delivery fell 0.7% to US$6.37 a bushel in Chicago. Milling wheat for May delivery declined 0.4% to EUR200.75 (US$268.76) a tonne on NYSE Liffe in Paris.

Inventories of wheat in the US, the largest shipper, will climb to 957 million bushels from 845 million bushels a year earlier as production rises, the USDA said.

Soy for May delivery were little changed at US$12.8625 a bushel in CBOT, after the price earlier today reached a five- month high. A decline today would be the first in six sessions.