April 1, 2013 / 8:06 AM / 6 years ago

GRAINS-Corn posts biggest-ever two-day decline on big supply

* Corn price lowest since late June 2012
    * U.S. report shows stocks higher than expectations
    * New-crop corn underpinned by unwinding of bull spreads
    * Wheat falls with corn to 9-month low

 (Updates with corn two-day drop milestone, wheat condition
    By Rod Nickel
    WINNIPEG, Manitoba, April 1 (Reuters) - Chicago corn prices
experienced their biggest two-day drop on record, tumbling 12.6
percent, or 93 cents, as larger-than-expected U.S. stockpiles
weighed on the market.
    Pressured by corn, Chicago wheat fell to its lowest nearby
price in nine months, and soybeans hit a nearly three-month low.
    Chicago Board of Trade May corn on Monday fell 53
cents, or 7.6 percent, to $6.42-1/4 per bushel, touching the
lowest price since late June and flirting with its expanded
daily limit of 60 cents.
    The 12.6 percent drop in the nearby contract over two days
was the largest ever for a spot month contract.
    Corn sagged on selling by hedge funds, said Arlan Suderman,
a senior market analyst at Water Street Advisory. 
    "I think this market is going to stay softer awhile yet."
    CBOT floor sources said funds have sold 75,000 CBOT corn
contracts over the past two days, or 375 million bushels of
corn, which represents more than 35 percent of last year's U.S.
    The outlook is not so bearish for new-crop corn contracts,
however, with most of the planting season ahead.
    September and December corn fell more modestly after the
U.S. Department of Agriculture forecast last week, in line with
expectations, that U.S. farmers would sow 97.3 million acres.
    "The stocks report certainly is taking precedence because of
the correction in the bull spread," Mike Zuzolo, president of
Global Commodity Analytics said, referring to positions that
were long nearby corn and short new-crop months.
    The USDA surprised the market with forecasts for old-crop
corn supplies, estimating the stockpile at the lowest in nine
years, that beat the average estimate of the lowest in 15 years.
    It pegged corn stocks as of March 1 at 5.399 billion
bushels, above the average analyst estimate of 5.013 billion
bushels. The USDA also said farmers would plant the highest corn
acreage since 1936. 
    Although corn and soybean stocks were larger than expected,
three years of declining production have depleted supplies,
leaving little leeway for a bad harvest. March 1 stocks for both
crops were the smallest total on that date since 2004.
    Cold weather this week in the U.S. Midwest and showers in
the Plains hard red winter wheat region will slow early corn
plantings, but also help boost wheat production prospects,
agricultural meteorologist Kyle Tapley of MDA Weather Services
said on Monday. 
    "Next week temperatures will be warming and it will be drier
in the Midwest, so there is improved planting weather," Tapley
said. "And rains will be increasing in the Plains so that will
help the wheat crop."
    The colder weather in the short term helped underpin
new-crop corn prices and may have left wheat primed for a
short-covering rally, Zuzolo said.
    CBOT May soybeans gave up 14 cents, or 1 percent, to
$13.90-3/4 a bushel, on the bearish USDA stocks data and long
    USDA's estimate for soybean stocks of 999 million bushels
was 7 percent larger than the average trade number and topped
even the most bearish forecast. 
    May wheat lost 23-3/4 cents or 3.5 percent to $6.64
per bushel.
    Investment bank Goldman Sachs added to the bearish mood on
Monday by lowering its price forecasts for corn, soybeans and
wheat, citing the larger than expected stocks, trade sources
said. Goldman cut its three-month price forecast for Chicago
Board of Trade corn futures to $6.50 per bushel from $7.50
    For CBOT soybeans, Goldman lowered its three-month price
forecast to $13.50 a bushel from $14 and cut CBOT wheat's
outlook to $6.50 from $7.80.
    USDA grain export inspection data, which measures the volume
cleared at ports or in position to be exported, came in higher
than a range of trade estimates for corn (19.1 million bushels)
and wheat (25.7 million bushels). Soybean inspections of 16.3
million bushels were in line with expectations. 
    The worst drought in more than 50 years has left the U.S.
Plains wheat crop struggling against dry soils. Rains now would
help the crop get off to a good start after winter dormancy.
    USDA on Monday said the U.S. winter wheat crop was in worse
shape than last year, although the crop's condition has improved
from the autumn.
    In its first crop progress report of the year, USDA said 34
percent of the winter wheat crop was rated good to excellent,
down from 58 percent a year ago. 
    Plantings of all varieties of U.S. wheat were estimated at
56.4 million acres, up 1 percent from last year, while stocks of
wheat were up 3 percent from a year ago. Wheat stocks, at 1.234
billion bushels, were 5 percent larger than expected.
    Large speculators raised their net long position in Chicago
Board of Trade corn and soybean futures in the week to March 26,
 ahead of the USDA report, regulatory data showed.
 Prices at 4:51 p.m. CDT (2151 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  642.25   -53.00  -7.6%   -0.7%
 CBOT soy                  1390.75   -14.00  -1.0%   16.0%
 CBOT meal                  398.50    -6.10  -1.5%   28.8%
 CBOT soyoil                 50.06    -0.05  -0.1%   -3.9%
 CBOT wheat                 664.00   -23.75  -3.5%    1.7%
 CBOT rice                 1526.50    -9.50  -0.6%    4.5%
 EU wheat                   238.50    -8.25  -3.3%   17.8%
 Dow Jones                  14,573       -6   0.0%   19.3%
 Gold                      1598.89     0.49   0.0%    2.2%
 Euro/dollar                1.2846  -0.0001   0.0%   -0.8%
 Dollar Index              82.7150  -0.5060  -0.6%    3.2%
 Baltic Freight                910      -12  -1.3%  -47.6%
 (Additional reporting by Sam Nelson and Michael Hirtzer in
Chicago and Naveen Thukral in Singapore; Editing by Joseph
Radford, Nick Zieminski, Grant McCool and David Gregorio)
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