corn futures quotes

corn futures quotes

September 11th, 2015

Corn futures made headway, dragging wheat higher, after the US forecast a deeper-than-expected drop in its inventories of the grain this season, and lifted expectation for farm prices.

But soybean futures tumbled to a six-year low, after the US Department of Agriculture, in its monthly Wasde crop report, made an unexpected upgrade to expectations for the domestic harvest of the oilseed this year, citing record yield prospects some major western Corn Belt producing states.

Corn futures for December gained 2.5% at one stage, taking the, to a three-week high of $3.83 ¾ a bushel, after the USDA cut its forecast for domestic stocks at the close of 2015-16 by 125m bushels to 1.59bn bushels, nearly twice the downgrade that investors had expected.

The extent of the cut reflected in part a drain in stocks last season from more consumption, both domestically and through exports, than had been previously forecast.

‘Depriving crops of heat’

However, the USDA also lowered by 1.3 bushels, to 167.5 bushels per acre its estimate for the domestic corn yield this year, a slightly bigger drop than investors had expected, and meaning a smaller corn harvest than the market had been banking on.

“Average monthly temperatures were below normal across the Corn Belt and the northern Great Plains during the month of August depriving crops of heat units as they were developing towards maturation,” the USDA said.

With tighter stocks typically meaning higher prices, as buyers are forced to compete harder for supplies, the USDA lifted by $0.10 to $3.45-4.05 a bushel its forecast for farmgate values of corn this season.

The average farm price for 2014-15, which finished at the end of last month, was pegged at $3.68 a bushel, the lowest since 2009, when supplies were also – as last year – boosted by a record yield.

‘Excessive heat and dryness’

The corn market was also supported by the Wasde forecasting of a larger-than-expected drop in world stocks of the grain too, by 5.4m tonnes, reflecting lower forecasts for harvests outside the US too.

“Much of the decline in global corn production reflects a 4.3m-tonne reduction in European Union corn, and this month’s lower US production, but small reductions are also made for the Philippines, Moldova, Serbia, and Thailand,” the USDA said.

“Almost every producing nation in the EU is estimated to have lower production after a summer with excessive heat and dryness.”

Despite some rainfall last month, “significant damage is still being realised”, the department said, cutting by 500,000 tonnes to 13.5m tonnes its forecast for the French crop, the EU’s biggest, and by 1.0m tonnes to 8.7m tonnes its estimate for the harvest in second-ranked Romania.

Six-year low

However, soybean futures crumbled – dropping 2.1% to $8.66 a bushel at one point for September delivery, the lowest for a spot contract in six years – after the USDA unexpectedly raised its forecast for the domestic harvest, citing a small upgrade to yield expectations.

Investors had forecast a drop of 47m bushels in the production forecast, amid ideas of crop damage from some heat and dryness last month, besides potentially from a wet spring too.

But the USDA forecast record yields for a large swathe of western Corn Belt states, including Iowa, Minnesota and Nebraska, besides in some pockets further east, such as Kentucky and Michigan, too.

While the USDA did lower its forecast for US soybean stocks at 2015-16, a reflection of larger-than-expected exports and domestic crushing last season, the downgrade of 20m bushels was far lower than the 55m-bushel cut that the market had pencilled in.

‘Small crop gets smaller’

The data were termed by Mike Zuzolo at Global Commodity Analytics as “needed” for corn, which had been under selling pressure last month, but had revived in September a little on reports of disappointing yields from the early harvest.

Indeed, invoking a common Chicago adage, he said that the Wasde “takes the trade back to wonder if a ‘small crop gets smaller’ as we progress”.

The data were also likely to make long corn and short soybean spreading “a major feature by the funds”.

However, at Futures International, Terry Reilly cautioned that the rise in corn futures could be short-lived, with harvest ramping up, bringing extra supplies to market and weighing on prices.

“Chicago ag prices seasonally decline after the September report and we expect that to happen this year as US producers head into the bulk of harvest season,” Mr Reilly said.