* US corn stocks 3 pct below trade expectation
* US winter wheat sowings up 1 pct, less than expected
* US corn, soybean crops up 1 pct, larger than expected
* Brazil soy crop forecast at record 82.5 mln tonnes
* "Strong, volatile" corn prices "well into summer" - USDA
By Charles Abbott
WASHINGTON, Jan 11 The U.S. quarterly corn
stockpile came in well below expectations because of drought
losses that also led the government to forecast on Friday the
smallest corn carry-out in 17 years.
U.S. winter wheat seedings rose just 1 percent from a year
earlier, the U.S. Department of Agriculture said, and were lower
than market expectations.
Chicago Board of Trade corn and wheat
futures jumped on the back of the bullishly interpreted report,
each rising more than 3 percent. Soybean futures briefly
cut losses despite the USDA's forecast for a larger South
American soybean crop.
"The priority was the bullish corn stocks report and the
government's numbers showing feed use is stronger than we
thought. They had to go up sharply on feed demand and had to
slice exports a lot," said Don Roose, president of U.S.
Commodities in Des Moines, Iowa.
As of Dec. 1, after the first quarter of the marketing year,
the United States had 8.03 billion bushels of corn on hand,
below even the low end of market expectations averaging 8.28
billion. It was the lowest December corn inventory since 2004
and down 17 percent from a year earlier.
"I thought corn would trade limit-up based on the stocks
numbers alone," said Roy Huckabay, analyst with The Linn Group
In a battery of reports, the Agriculture Department pegged
the 2012 U.S. corn crop at 10.780 billion bushels, the smallest
in six years but above the average trade guess of 10.665 billion
Soybean production, at 3.015 billion bushels, was above the
average guess of 2.97 billion but still the smallest in four
The USDA forecast a razor-thin 602 million bushels of corn
will remain when the new crop is ready for harvest by late
summer. That would be the smallest carry-out since 1996 and less
than a three-week supply.
"While stiff competition has limited U.S. corn exports,
higher domestic disappearance leaves the balance sheet
historically tight and is expected to support strong and
volatile prices well into summer, particularly in the domestic
cash markets," the USDA said.
LATE-SEASON SOYBEAN, CORN YIELDS CREEP UP
The corn and soybean crops were up 1 percent from the USDA's
previous forecasts due to higher yields, and also 1 percent
larger than traders had expected.
Estimated production has crept up since dire initial
forecasts, especially for soybeans, where parts of the crop were
still able to benefit from late-season rains.
Growers sowed 41.82 million acres (16.92 million hectares)
of winter wheat for harvest this spring, 2 percent below the
average trade forecast of 42.687 million.
Farmers sowed slightly less land to hard red winter wheat
than expected but significantly more soft red wheat.
"Widespread drought conditions and lack of moisture continue
to be a concern across much of the HRW (hard red winter) growing
area," said the USDA, which this week declared a natural
disaster in much of the central and southern Wheat Belt.
BRAZIL TO OVERTAKE U.S. AS TOP SOYBEAN GROWER
Brazil will harvest a record 82.5 million tonnes of
soybeans, larger than traders expected, due to record plantings
and improving yield prospects, the USDA said. With a mammoth
crop, Brazil would surpass the United States as the world's No.
1 soy grower and exporter for the first time.
U.S. soybean supplies will be tight but little changed from
the most recent forecast. The Dec. 1 inventory was 17 percent
smaller than a year earlier although in line with market
expectations and pointed to the smallest carry-out in nine
"To me, it still implies a tight situation," Jack Scoville,
vice president of Price Futures Group, said of the soybean
figures. "I think the beans are more looking ahead to what's
coming up, which is (export competition from) Brazil and
Tight U.S. supplies point to a need for large crops this
year to rebuild stockpiles. Drought now covers 60 percent of the
continental United States, twice the area affected in January
Drought is currently the worst in the wheat-growing Plains
and in the western half of the Corn Belt.
Winter wheat usually accounts for the lion's share of the
U.S. crop but experts say an unusually large 25 percent of the
plantings may be abandoned because of poor development in dry
World food supplies remain tight and prices high. A report
on Thursday from the U.N.'s Food and Agriculture Organization,
however, showed that a basket of prices for various grains and
foods, including dairy, meat and sugar, fell for a third month
in a row to its lowest since June.