* Corn stocks 11 pct bigger than analysts expected
* Corn sowing 2 pct above, leads to "historic" price dive
* "American producers stepped up"-Vilsack
* USDA to revisit plantings for four northern states (Reledes. Adds skeptics point of view.)
By Charles Abbott and Christine Stebbins
WASHINGTON/CHICAGO, June 30 (Reuters) - U.S. corn stockpiles are far larger than thought and a bumper harvest is on the way, the government said, in reports on Thursday that alleviated worries of a global food shortage and sent corn prices tumbling by record amounts.
Corn prices went down by a one-two punch from the Agriculture Department's annual acreage and quarterly grain stocks reports, which showed ample supplies despite months of fretting over dwindling stockpiles that drove corn prices to record highs in recent weeks.
"American producers stepped up," U.S. Agriculture Secretary Tom Vilsack told Reuters Insider, noting that technology has boosted yields and mitigated concerns about tight world grain supplies.
Sky-high prices curbed demand, leaving June 1 stockpiles 11 percent larger than traders had predicted.
The news could help ease price shocks that have rippled through to the bottom lines of U.S. food makers and contributed to calls to limit commodity market speculation, which many blame for driving prices higher and fanning global inflation.
General Mills (GIS.N) and other companies that use U.S. crops to make food have blamed high commodity prices for inflating costs and hurting earnings. [ID:nN1E75S0TF]
Food costs have spiraled globally and U.S. corn prices had risen by as much as 25 percent this year, made worse by spring flooding in the Midwest, stirring concerns over shortages and causing some livestock farmers to switch to other grains.
The harvest, however, is two months away. So there is still uncertainty about the toll of rain and flooding on crops, and grain markets remain volatile. Some traders said, USDA was too optimistic -- it has North Dakota plantings down by 1 percent, for example. State officials say 25 percent may go idle.
"I don't know if this piece of news is enough to completely take away the cost pressures," said Morningstar analyst Erin Lash.
Corn, soy plantings r.reuters.com/pep42s
Wheat plantings r.reuters.com/rup42s
Corn stocks r.reuters.com/qys42s
Soy stocks r.reuters.com/pys42s
Wheat stocks r.reuters.com/nys42s
INSTANT VIEW [ID:nN1E75T09R]
INSIDER: Vilsack interview link.reuters.com/pet42s
FACTBOX-Roller-coaster ride for corn [ID:nN1E75T1BV]
FACTBOX-Third of wheat in hard-hit area [ID:nN1E75T195]
FACTBOX-US plantings of 8 major crops [ID:nN1E75T0FK]
TAKE A LOOK-Rising world food prices [ID:nFOODPOLIC]
"THIS IS HISTORIC"
The report caused havoc in trading pits at the Chicago Board of Trade, where corn for July delivery CN1 settled 10 percent lower at $6.29 a bushel -- a record decline by value and percentage -- and deferred contracts locked down the limit of 30 cents per bushel. [GRA/]
The July contract is in its delivery period and trading without limits.
With futures halted, traders rushed to the options pit, where panicked trading indicated futures prices could plunge again on Friday. [ID:nN1E75T13R]
"There is nothing like this on the chart," said Rich Feltes, a veteran grain analyst with R.J. O'Brien, who has watched the market rise and fall for more than 35 years.
"This is historic," he said.
Before the report, corn prices had already slid 20 percent from their peak near $8 per bushel reached three weeks ago.
There was added drama for algorithmic traders.
A technical equipment glitch in USDA's guarded lock-up room led to the release of information by Reuters and other wire services two minutes earlier than scheduled, throwing off some computer programs. [ID:nN1E75T0VV]
"This is scandalous. Paris was the only market open when the USDA (data) was released. We had no warning that the report would be released earlier than scheduled and we want to know why," said a dealer at a leading broker in Euronext futures.
In London, the International Grains Council raised its forecast for world corn and wheat crops in the year ahead. [ID:nL6E7HU164]
HARVEST NOT YET IN THE BIN
Red-hot demand from corn exporters, livestock feeders and processors are forecast to consume every bushel grown in 2010 and eat into reserves, but the higher stocks number was a sign that demand has been rationed.
U.S. lawmakers are also weighing ending subsidies worth $6 billion a year to ethanol makers, a move that could affect demand since nearly 40 percent of the U.S. corn crop goes to ethanol production. [ID:nLDE75S0ES]
The USDA said the corn stockpile was 3.67 billion bushels on June 1, and it pegged plantings at 92.28 million acres. With normal weather and yields, a record-large crop could be harvested.
The USDA said, it will resurvey farmers in four northern Plains states that normally produce a third of the U.S. wheat crop. It includes North Dakota, No 1 in wheat last year.
A large percentage of those states had not yet planted crops as of early June, when the USDA conducted its acreage survey. [ID:nWNA2566]
July wheat WN1 was down 9 percent at $5.84-3/4 a bushel, posting its biggest percentage loss in more than two years, in sympathy with the losses in corn. Wheat stocks were 4 percent larger than traders expected and plantings were down marginally.
The USDA report was mildly supportive for soybeans, with plantings 2 percent smaller than traders had expected. July soybeans SN1 were down 2 percent at $13.06-1/4.
The soybean crop would be the third-largest on record, but supplies are still expected to run tight. (Writing by Roberta Rampton; Additional reporting by Christopher Doering and Emily Stephenson in Washington; Marie Maitre in Paris; Mark Weinraub, Sam Nelson and Julie Ingwersen in Chicago; and Martinne Geller in New York; editing by Jim Marshall, Alden Bentley and Carole Vaporean)