By Karl Plume
CHICAGO, May 10 (Reuters) – U.S. corn futures fell about 2 percent on Friday after the government forecast a record crop that would bolster U.S. stocks to more than 2 billion bushels at the end of next season, above trade expectations.
Soybean futures slid modestly following the U.S. Agriculture Department report at midmorning, pressured by forecasts for a bumper U.S. harvest that would reverse three straight years of tight supplies.
Wheat prices dropped more than 2 percent as the USDA forecast global supplies well above trade expectations and on spillover pressure from sinking corn.
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Although grain stocks in the United States remained very tight, investors were increasingly focusing on the likelihood that U.S. production would handily recover from the worst U.S. drought since the 1930s last summer.
“We’ve certainly got some tightness in old-crop corn and soybeans, but with each day that passes the market is getting more comfortable with that,” said Brian Basting, analyst at Advance Trading in Bloomington, Illinois.
“The combination of the USDA numbers and some better planting weather prospects next week are enough to offset Thursday’s gains,” he said.
In its first projection of the fall harvest and 2013/14 balance sheets, USDA said the corn crop would be a record 14.14 billion bushels despite a late start to the planting season that will lower yields.
U.S. corn ending stocks for 2013/14 would hit 2.004 billion bushels, USDA said, nearly triple the 759 million forecast for the Aug. 31 end of this marketing year. The forecast was also above the trade estimate for 1.993 billion and the highest in nine years.
U.S. soybean production was projected at a record 3.390 billion bushels with 2013/14 end stocks more than doubling to 265 million bushels from the 125 million estimated for the end of this season. The forecast was above trade expectations for 236 million bushels.
“The ending stocks figure is a huge number for corn and a big number for soybeans, above what the trade was expecting,” said Brian Hoops, president of Midwest Market Solutions.
“The trade has had a bearish reaction to it. There is nothing in this report to say it’s bullish.”
At 12:35 p.m. CDT (1735 GMT), Chicago Board of Trade July corn was down 14 cents, or 2.2 percent, at $6.34-3/4 a bushel and new-crop December was down 13-1/2 cents, or 2.5 percent, at $5.28 a bushel.
CBOT July soybeans fell 5-1/4 cents to $14.03-1/2 a bushel and new-crop November shed 11-1/2 cents to $12.07-1/2.
CBOT July wheat futures dropped 19 cents, or 2.6 percent, to $7.04-1/2 a bushel, pressured by USDA’s larger-than-expected 2013/14 world stocks forecast of 186.38 million tonnes, about 2 million above pre-report projections.
