* USDA reports bullish for corn and soybeans
* No reason to expect demand to decline
* Wheat to follow corn and soy higher
* Coming up: Trade anxious to see if gains hold up
By Sam Nelson
CHICAGO, June 30 (Reuters) - A shocking acreage and stocks report released by the U.S. Department of Agriculture draws attention to the explosive potential for CBOT corn futures prices, a CME Group (CME.O) panel of analysts said on Wednesday.
“This is a shot across the bow and is astonishing given the fact farmers like to plant corn,” said Greg Wagner, an independent analyst.
In its June plantings report, USDA said American farmers had planted 87.9 million acres of corn this spring, below the lowest end of a range of analysts’ estimates for 88.1 million to 90.2 million.
USDA also said the supply of corn in the United States on June 1 totaled 4.310 billion bushels, below an average of analysts’ estimates for 4.598 billion bushels.
Trade sources said Chicago Board of Trade (CBOT) corn futures were expected to open at least 10 to 15 cents per bushel higher, and there were some outlooks for a 30 cents per bushel limit-up move on Wednesday.
“From the March report to the June report, corn acreage usually increases, but not this year,” said Jim Bower of Bower Trading Inc.
The USDA in its March planting intentions report pegged the corn area this year at 88.8 million acres.
“I would say the seasonal lows are in, we’ve had a big sell-off,” Bower said.
CBOT corn futures fell to nine-month lows on Tuesday in anticipation of a huge corn acreage number and on a turn to better crop weather in the U.S. Midwest.
“Potentially, new-crop December corn CZ0 could get back up to $3.80 to $3.90, over time,” Wagner said.
CBOT new-crop December CZ0 closed on Tuesday at $3.44 per bushel.
Wagner and Bower said the demand for corn and soybeans would remain strong from the biofuels and feeding sectors, and China is now importing corn and continues to buy soy which adds to the bullish outlook.
“If demand holds up, and there’s no reason to think it won’t, this is a very friendly report for corn and beans,” Bower said.
USDA pegged the U.S. soybean supply on June 1 at 571 million bushels, down from an average of analysts’ estimates for 594 million, and forecast 2010 U.S. soy acreage at 78.9 million, above an average estimate for 78.2 million.
The analysts said old-crop July CBOT soy futures SN0 would gain on new-crop November SX0 because of the lower stocks and larger acreage in the government’s data.
There are expectations for soybeans to trade 10 to 15 cents per bushel or more higher on Wednesday.
Wheat also is expected to be up on Wednesday on spillover support from corn and soybeans and despite U.S. wheat acreage and wheat supplies in Wednesday’s USDA data that exceeded analysts’ average estimates.
“The next few days will be critical, the trade has been given a very bullish fundamental report,” Wagner said. (Reporting by Sam Nelson; editing by Jim Marshall)