Corn futures were hammered lower on Thursday, pulling down all crop futures after the U.S. Department of Agriculture surprises the market with larger than expected forecast for seeded corn acres.
Traders had expected that the wet spring would cause USDA t lower its estimate of corn acres, but it increased them. If correct, it indicates that the run up to record high corn prices in early June caused farmers to make every effort to seed corn and perhaps cut down on soybeans.
The report was less bearish for oilseeds, with the seeded area number for soybeans less than what traders expected.
However, soybean stocks as of June 1 were higher than expected, offsetting the support from the small sowing number.
July canola settled at $560.20 per tonne, down $25 and November closed at $552.60, down $16.10.
On the week, July fell $19.60 and November fell $13.30.
The USDA report suffered from the same problem that the recent Statistics Canada survey did. The agencies talked to farmers when there were still a lot of acres to be seeded. There was a lot of wet weather after the surveys and that might change the final outcome with additional prevented seeding or flooding killing crops that were seeded.
A large percentage of land in North Dakota, South Dakota, Montana and Minnesota was not planted in early June when farmers were surveyed.
Earlier this week, officials in North Dakota said a quarter of crop land did not get seeded.
USDA says it will resurvey farmers in those states in July and issue a new report in August if justified.
In its June 10 forecast USDA had dropped its corn acreage forecast to 90.7 million acres, but in today’s report it pegged the area at 92.282 million. The trade on average had predicted 90.767 million acres.
Also bearish for corn was the June 1 stocks number that came in at 3.67 billion bushels, above an average trade estimate for 3.302 billion and compared with 4.310 billion a year ago.
In soybeans the acreage number was supportive, but the lift was offset by a bearish stocks number.
USDA sees 75.208 million soybean acres, below an average trade estimate of 76.530 million and below its March forecast of 76.609 million.
But June 1 stocks of 619 million bu. topped trade estimates for 596 million and last year’s 571 million.
The canola number was bullish. U.S. canola area was put at 1.14 million acres, down from the March forecast for 1.61 million.
USDA lowered its spring wheat planted acreage number but not as much as expected.
It pegged seeded area at 13.627 million acres, above forecasts for 13.349 million. All-wheat acreage came in at 56.433 million, below the average trade estimate of 56.671 million.
USDA estimated wheat stocks as of June at 861 million bushels, above trade estimates for 826 million and compared with 973 million a year ago.
The report was supportive of durum prices. Durum area was pegged at 1.7 million acres, down from the March forecast for 2.37 million and trade estimate of about two million.
Also negative for prices was a new forecast from the International Grains Council. It raised its forecast for global corn and wheat crops in 2011-12.
Global corn increased to a record 858 million tonnes, up from a previous forecast of 843 million and last year’s 825 million. Wheat was edged up to 666 million tonnes from the forecast of 663 million and last year’s 650 million.
While most of the news in the market was negative, oilseeds analysts Oil World updated its European Union rapeseed forecast, saying recent rains did not make up for the spring drought.
It pegged EU production at 18.91 million tonnes from 20.5 million tonnes in 2010.
The forecast for EU rapeseed crushings is 21.3 million tonnes so it implies the need for large imports.
A silver lining from the USDA report is that the resulting lower prices will likely spur buying that will support prices. Also, it will lessen the inflation that was a drag on economic growth. With crude oil also down from the highs of early June, the U.S. and other economies might post better growth numbers in the second half of the year.
ICE Canada in Winnipeg will be closed Friday for Canada Day. U.S. markets will close Monday for Independence Day.
Winnipeg (per tonne)
Canola Jul 11 $560.20, down $25.00
Canola Nov 11 $552.60, down $16.10
Canola Jan 12 $559.60, down $15.80
Canola Mar 12 $563.70, down $16.10
The previous day’s best basis widened to $19.63 under the July contract according to ICE Futures Canada in Winnipeg.
The July contract’s 14-day Relative Strength Index was 38. The rule of thumb is an RSI of 30 indicates an over sold market and 70 indicates an over bought market.
Western Barley Jul 11 $207, unchanged
Chicago (per bushel)
Soybeans Jul 11 $13.0625, down 28.0 cents
Soybeans Aug 11 $12.995, down 28.0
Soybeans Nov 11 $12.94, down 29.0
Corn Jul 11 $6.29, down 69.0
Corn Dec 11 $6.205, down 30.0
Oats Jul 11 $3.34, down 11.0
Oats Dec 11 $3.47, down 11.5
Minneapolis (per bushel)
Spring Wheat Jul 11 $8.2325, down 52.75 cents
Spring Wheat Sep 11 $7.95, down 54.5
Spring Wheat Dec 11 $7.9225, down 56.0
Light crude oil nearby futures in New York rose 66 cents to $95.42 US per barrel.
The Canadian dollar at noon was $1.0370 US, up from $1.0304 the previous trading day. The U.S. dollar at noon was 96.43 cents Cdn.
The Toronto Stock Exchange composite index unofficially closed up 111.93 points, or 0.85 percent, at 13,300.87.
The Standard & Poor’s 500 Index rose was up 13.09 points, or 1.00 percent, to close unofficially at 1,320.50.
For June, the Dow was down 1.3 percent, the S&P was down 1.8 percent and the Nasdaq was down 2.2 percent.
