October 1, 2011

 

Higher-than-estimated US corn, wheat stocks may dampen prices

 

 

US corn and wheat stockpiles were far larger than expected as of September 1, which should provide a buffer against this year's drop in crop production and push prices lower, a USDA report showed Friday (Sep 30).

 

A quarterly survey of growers and warehouses found corn stocks were 17% larger than traders expected, according to the report.

 

The wheat stockpile was 6% larger than expected, and soy 5% smaller.

 

The data is just another in a series of surprises for the market involving USDA data.

 

Traders said the figures showed that livestock producers have cut back on using grain, especially corn, as feed. Feeders have complained for months they cannot afford to pay record-high corn prices.

 

Corn futures prices were expected to drop by 15-20 US cents a bushel when trading opens in Chicago. Corn is down 17% this month and could reach its lowest price of the year.

 

Wheat was expected to fall by 5-10 cents. Lower wheat and corn prices will pull down soy by 15-20 cents, traders said. European wheat futures fell over 2% after the USDA data was released, hitting their lowest levels in seven weeks.

 

While larger than expected, the US corn stockpile of 1.128 billion bushels was the smallest since 2003. Still, it amounted to a 4-1/2 week supply, three or four days more than expected.

 

USDA said this year's wheat crop, at 2.008 billion bushels, was down 9% from last year and 2% smaller than traders expected. The spring wheat crop was down 11% from USDA's previous estimate and 6% smaller than traders expected.


"Excessively wet conditions" reduced spring wheat plantings in Montana and North Dakota, the two major states, by 12%, USDA said.

 

The agency surveyed 66,000 growers and all commercial warehouses for its quarterly report on grain stocks. It says the on-farm-stocks figure for corn has a margin of error of 7.6%. On-farm storage is 56% of corn storage capacity.