Corn futures plunged to a three- year low after the U.S. Department of Agriculture boosted its inventory estimate by 25%. Soybeans dropped the most in six months as supplies topped analyst estimates by 11%.
Stockpiles of corn on Sept. 1 were 824 million bushels, the USDA said today in a report. That compared with the agency’s estimate of 661 million on Sept. 12. Analysts in a Bloomberg News survey last week expected 694 million, on average. Soybean inventories were 141 million bushels, and a gauge of demand tumbled 41% in the three months ended Aug. 31 from a year earlier.
Corn has tumbled 37% in 2013, the biggest drop among 24 raw materials in the Standard & Poor’s GSCI Spot Index, amid forecasts for a record crop. Demand for the U.S. grain fell the most since 1975 in the past year. The nation is the world’s top grower.
“The market is going to be dealing with big corn supplies for the next year, and that’s going to limit rallies,” Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview.
Corn futures dropped 2.8% to close at $4.415 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price touched $4.4075, the lowest for a most-active contract since Sept. 1, 2010.
On Sept. 12, the USDA estimated soybean inventories at 125 million. Last week, 28 analysts surveyed by Bloomberg News projected 127 million, on average. The U.S. is the top producer.
“Supplies are a little bigger than people expected,” Randy Mittelstaedt, the director of research at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Without a bullish surprise, the market is under pressure with the harvest coming very quickly. Yields collected so far have been better than expected, and now we’ll wait to see what happens to the crops that were planted late because of the flooding.”
Soybean futures for November delivery fell 2.8% to $12.8275 a bushel, the biggest drop since March 28. Earlier, the oilseed touched $12.80, the lowest since Aug. 19. The price has dropped 9% this year.
The USDA earlier this month predicted a record corn harvest of 13.843 billion bushels, 28% above last year, signaling lower costs for livestock feed. The agency will update its projections for crops on Oct. 11.
Cheaper corn is boosting profit for Archer-Daniels-Midland Co., which makes ethanol from the grain, and Sanderson Farms Inc., the third-largest U.S. poultry producer.
Wheat futures for December delivery fell 0.7% to $6.785 a bushel. The price rose in the previous five sessions, the longest rally since mid-March. The grain has dropped 13% this year.
Corn is the biggest U.S. crop, followed by soybeans, hay and wheat, USDA data show.