Corn fell the most this month and soybeans posted the biggest drop since March on signs of ample global supplies as U.S. farmers rebound from last year’s drought with record crops in 2013. Wheat also declined.
Stockpiles of corn in the U.S., the world’s top grower, will more than double to 1.959 billion bushels by the start of the 2014 harvest, the U.S. Department of Agriculture said yesterday. The agency also reduced its outlook for global demand, which will fall short of production. Soybean reserves in the U.S. also will double, boosting world stockpiles by 20% to a record 74.12 million tons, USDA said.
“We continue to expect a significant recovery in U.S. corn and soybean production and lower prices” in the second half of 2013, Damien Courvalin, a New York-based analyst at Goldman Sachs Group Inc., said in an e-mailed report. “Our expectation for lower prices also reflects the already realized large South American harvest and current weakness in global demand.”
Corn futures for December delivery, after the harvest, fell 3.4% to close at $5.0925 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest drop for the most-active contract since June 28. For the week, prices gained 3.7% amid earlier concerns that warm weather in parts of the U.S. may hurt crops. Last year, corn rallied to a record $8.49 in August, as the drought cut output by 13%.
Soybean futures for delivery in November dropped 2.6% to $12.5725 a bushel on the CBOT, the biggest decline since March 28. The most-active contract was up 2.4% for the week.
Prices also fell on speculation that warm, sunny days and cool nights during the next week should help to boost yield potential for corn and soybeans in most of the Midwest, Jerrod Kitt, the director of research for the Linn Group on Chicago, said in a telephone interview.
Temperatures the next 10 days will be near normal for most of the Midwest, with rain developing by the end of next week to aid crop development, especially in portions of the driest areas of Nebraska, western Iowa, Missouri and Kansas, T-Storm Weather LLC said in a report today.
“There is nothing in the weather forecasts that is threatening to crop development across the northern and eastern Midwest,” Kitt said. “Corn yields are angling higher.”
Also in Chicago, wheat for September delivery declined 0.3% to $6.81 a bushel, halting a four-day rally. Prices gained 3.2% this week on increased Chinese demand for U.S. supplies and shrinking global production.
Yesterday, the USDA cut its forecast for global wheat inventories to 172.38 million tons, 4.9% smaller than estimated in June, amid rising demand in China. U.S. export sales jumped to 1.47 million tons in the week to July 4, more than double a week earlier, with China buying 1.02 million tons, according to a separate USDA report.