Corn swings to limits on China-sized errors

Actual Inventory

On-farm storage gives producers more options for when they sell crops. About 61% of corn is marketed in the first six months of the season that starts Sept. 1, with about 19% sold in each of the next three-month periods, nine years of government data show.

“Farmers are holding more supplies than usual this year, making it more difficult to determine the actual inventory,” said Jason Marthaler, the senior corn merchandiser for CHS Inc., the biggest U.S. cooperative, in Inver Grove Heights, Minnesota. “It’s going to stay volatile until we get to the harvest.”

With reduced supply from 2012, higher-than-average income and planting for this year’s crop delayed by rain, farmers have been reluctant sellers, said Chad Henderson, the president of Prime Agricultural Consultants Inc. in Brookfield, Wisconsin.

Growing State

Corn futures for delivery in July, reflecting grain from 2012, rose 9.1% to $6.6525 since reaching a 10-month low of $6.10 on April 24. Cash prices in parts of Iowa, the biggest growing state, averaged the highest ever this year, according to Roger Fray, the executive vice president for the farmer-owned West Central Cooperative based in Ralston, Iowa.

Tightening supplies before the 2013 harvest are boosting the cost of feed, the single biggest use of corn, Joe F. Sanderson Jr., the founder of Laurel, Mississippi-based Sanderson Farms Inc., the third-largest U.S. poultry producer, told analysts on a conference call June 4.

Inventory-forecasting errors occur mostly because of a lack of information on feed, which the USDA doesn’t track directly. Analysts surveyed by Bloomberg said they estimate stockpiles based on USDA production and export data, as well as the Department of Energy’s estimates of ethanol output. They also take into account seasonal demand patterns for starch and other corn-based food products.

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