WASHINGTON, D.C. (Reuters) — U.S. corn stocks were below expectations in December, and 2013-14 carryout will be smaller than expected, the U.S. Department of Agriculture said Jan. 10.
The news rallied corn futures.
The USDA expects that 1.631 billion bushels of corn will remain on hand when the new U.S. crop is ready for harvest by late summer, roughly double the drought-affected level of a year ago but down from 1.792 billion bu. projected in December.
The report caught many traders leaning the wrong way after the market set contract lows just one day earlier.
“The big buffer, the big cushion that we had, is not as big as we had previously thought,” said Don Roose, an analyst at U.S. Commodities.
The report trimmed the size of the U.S. corn crop, confounding the market’s recent expectation that big crops only get bigger.
Corn yields of 158.8 bu. per acre were down from 160.4 bu. estimated in November and also lower than the trade forecast.
“The whisper going in here was the USDA could come up with a 163 to 164 (bu. per acre corn yield). The fact that it went down was particularly surprising to a lot of the traders,” said Jim Gerlach of A/C Trading.
Following the report, Chicago corn futures closed up almost five percent, advancing two percent on the week. Soybeans pared gains to rise .6 percent and wheat was down almost three percent at new contract lows as traders focused on rising U.S. and world stockpiles.
The USDA also found that recent falling prices discouraged U.S. farmers from planting wheat.
Total winter wheat seeded area for 2014 was down three percent from a year ago at 41.9 million acres, with seedings of hard red winter wheat up and soft red winter wheat down sharply.
USDA’s battery of reports carried few surprises for soybeans, where projected 2013-14 U.S. ending stocks was unchanged. However, Brazil’s crop was raised again.