December 11, 2012 / 2:45 PM / in 5 years

UPDATE 3-US, world wheat stocks swell, USDA says; prices slide

* U.S. wheat stocks larger than trade forecasts, corn
    * World wheat stocks surprise on bigger China, Australia,
Canada crops
    * Chinese corn crop raised 4 percent from earlier forecast
    * Argentina crop trimmed to 27.5 mln Ts, higher than

    By Charles Abbott
    WASHINGTON, Dec 11 (Reuters) - Global wheat stockpiles will
end the marketing year higher than expected, while U.S. corn
inventories remain extremely low as lower prices bolster demand
from feeders, processors and exporters, the government said on
    In a monthly report on global crops that made few major
changes to the supply outlook, the U.S. Agriculture Department
(USDA) pointed to "the slow pace of sales" in raising its
estimate of U.S. wheat ending stocks by 7 percent to 754 million
bushels. Traders had expected 712 million bushels.
    The agency also raised its forecast for global wheat
inventories to almost 177 million tonnes, from 174 million in
November and well above market expectations, following estimates
of larger crops from Australia, Canada and China.
    Chicago wheat futures slumped almost 3 percent to
their lowest point since July, and Kansas City wheat futures
 also tumbled. Most of the increase in projected wheat
stocks was in the hard red winter class. 
    The huge losses in wheat dragged Chicago corn and soybean
futures lower by mid-morning after a higher start.
    "The pace of U.S. export wheat demand has been
disappointing, and until we see that improving, they (USDA) will
continue to ratchet their export demand lower," said Shawn
McCambridge, an analyst at Jefferies Bache.
     The agency pared its estimate of soybean ending stocks by
10 million bushels to a bare-bones 130 million bushels, the
lowest in 9 years but in line with estimates. That is the result
of a 10-million-bushel increase in the projected crush on the
back of unexpectedly strong soyoil and soymeal export sales.
    "On soybeans, 130 million (bushels) is basically pipeline
stocks," said Jim Gerlach, president of A/C Trading.
    For corn, the USDA stuck to its forecast for ending stocks
of 647 million bushels, the smallest in 17 years. Traders had
expected a slight upward revision to 663 million bushels.
    The outlook for razor-thin U.S. stockpiles for the 2012-13
year reflect the impact of crops hurt by the worst drought in
half a century - conditions that could threaten next spring's
plantings as well. The drought has deepened this winter, with
minimal precipitation and unseasonal warmth. 
    The USDA lowered its forecast for corn prices by 3 percent,
or 20 cents a bushel, from last month. 
    "Prices received by farmers through October remained well
below cash market bids, and this year's early harvest appears to
have boosted early-season marketings, placing further downward
pressure on the outlook for the season average price," said the
    The season-average price for U.S. soybeans for 2012-13 was
lowered by 35 cents per bushel as well, to a mid-point of
    Projected record-high soybean production in Brazil and
Argentina is expected to give the world market an infusion in
the spring. 
    The USDA kept its estimates for South American soybean
production unchanged from November at 81 million tonnes in
Brazil and 55 million in Argentina, both far above year-ago
levels as producers there respond to high prices. Traders had
not expected much change in those numbers.
    Brazil is poised to become the world's largest soybean
producer this season for the first time. 
    "Everyone is now looking at South American weather and
looking to the January (USDA) report," said Don Roose, president
of U.S. Commodities, West Des Moines, Iowa. 
    The USDA raised its estimate of the corn crop in China by 4
percent from a month ago, based on record yields for the world's
No. 2 grower. China also had a large wheat crop, up 2 percent
from the November estimate.
    The agency cut Argentina's corn production by 0.5 million
tonnes to 27.5 million tonnes, still much higher than trade
estimates of 26 million after timely rain in recent weeks.
 It left Brazil's outlook at 70 million tonnes,
in line with other forecasters.
    World corn stocks were forecast at 117.61 million tonnes,
slightly below trade expectations. 
    The global rice crop was forecast at a record 465 million
tonnes, up 1 million from November, on the back of larger crops
in Vietnam, Japan and North Korea.
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