Corn Futures Fall On USDA Report

 

–U.S. corn futures fall as traders are disappointed by USDA forecast for domestic inventories

–Wheat pressured by cheaper corn and by higher-than-expected U.S. wheat-inventories forecast

–Soybeans rise on lower supply forecasts

 
   By Owen Fletcher

CHICAGO–U.S. corn futures fell Friday, pressured by disappointment among market participants that a government forecast for domestic corn inventories came in no lower than analysts had expected.

Chicago Board of Trade September corn futures settled down 18 1/4 cents, or 2.2%, at $8.00 a bushel.

Corn futures jumped at first when the U.S. Department of Agriculture issued its monthly supply-and-demand report on Friday morning, including a greater-than-expected cut in the agency’s forecast for U.S. corn production. The USDA projected corn output of 10.779 billion bushels, down from its last forecast of 12.97 billion bushels.

September corn futures reacted by trading as high as $8.43 3/4 cents a bushel in the minutes after the report’s release, setting a record intraday high for the front-month contract.

But corn prices then began to fall on disappointment over the USDA’s forecast for domestic corn inventories, which the USDA projected at the end of the 2012-13 marketing year will be 650 million bushels, in line with predictions by analysts. Analysts said that forecast made the report neutral for corn overall, instead of price-supportive.

Speculative buyers likely sold futures to take profits after the initial jump in futures, also sending prices lower, said Arlan Suderman, an analyst in Wichita, Kan., for agricultural trade publication Farm Futures.

Some analysts said corn prices may still need to rise further to choke off more demand, in line with tighter supplies. The USDA on Friday cut its demand forecasts for corn used in ethanol production, in animal feed and for export.

Wheat futures followed corn to jump higher initially after the report’s release, but then fell and traded lower for most of the session. Corn and wheat prices are linked as the two crops compete in the animal-feed market.

Wheat took extra pressure from a higher-than-expected USDA forecast for domestic wheat inventories.

CBOT September wheat fell 27 3/4 cents, or 3.0%, to $8.85 1/4 a bushel. Kansas City Board of Trade September wheat fell 22 cents or 2.4% to $8.93 a bushel. MGEX September wheat fell 23 1/2 cents or 2.5% to $9.35 1/2 a bushel.

Soybean futures also pared their post-report gains Friday, but still finished the session higher. The USDA cut its U.S. soybean production forecast by more than expected, to 2.69 billion bushels from 3.05 billion bushels.

Soybeans also got a boost after the USDA announced the sale of 290,000 metric tons of soybeans by private exporters for delivery to China during the 2012-2013 marketing year. A series of similar announcements this week has highlighted continued strong demand for soybeans despite elevated prices.

August soybeans, thinly traded ahead of the contract’s Tuesday expiration, rose 15 cents, or 0.9%, to $17.09 1/2 a bushel. Most-active November soybeans rose 12 1/2 cents, or 0.8%, to $16.43 3/4 a bushel.

Write to Owen Fletcher at owen.fletcher@dowjones.com

Corn Futures Fall On USDA Report