Corn traded near its highest level in three years after the U.S. Department of Agriculture said global inventories will drop next year to the lowest since 2004 as rains cut acreage in the U.S., the world’s largest supplier.
The July-delivery contract traded at $7.84 a bushel on the Chicago Board of Trade at 9:45 a.m. Singapore time after climbing yesterday as much as 3.8 percent to $7.93 a bushel. That was the highest since June 2008, the month when the price surged to a record $7.9925 a bushel. Futures gained 4 percent this week and more than doubled in the past year.
Stockpiles around the world will be 117.44 million metric tons before this year’s Northern Hemisphere harvest, the USDA said yesterday. That’s smaller than the agency’s 122.19 million ton forecast last month and the average estimate of 121.46 million tons in a Bloomberg News survey. Those inventories will drop further next year to 111.89 million tons, an eight-year low, according to the U.S. agency.
The “changes will likely see strong support for new crop prices, with the December corn futures likely to benefit strongly,” according to a Rabobank International analysts Luke Chandler, Keith Flury and Erin FitzPatrick.
Corn for December delivery, after the U.S. harvest, traded at $7.12 a bushel after jumping as much as 4.2 percent to $7.2275 a bushel yesterday.
The rally is boosting costs for meat producers including Tyson Foods Inc. and ethanol makers such as Poet LLC. Global food prices climbed in nine of the past 11 months, touching a record in February. Food-price inflation and high unemployment helped spur unrest in northern Africa and the Middle East this year, ousting leaders in Tunisia and Egypt.
Tighter Supplies
Inventories in the U.S., the largest grower and exporter, will likely drop to 17.65 million tons at the end of the 2011- 2012 season, the USDA said yesterday, cutting the estimate from 22.85 million tons last month. Stockpiles will fall from an estimated 18.53 million tons before this year’s harvest.
“U.S. corn stocks in the 2011-2012 season are now expected to be tighter than the current season, implying that record high prices will need to persist for some time,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said in a report today.
The U.S. corn harvest may be 2.3 percent smaller than forecast in May after unusually heavy Midwest rains left muddy fields too wet for sowing seeds, the USDA said.
Planted acreage was forecast at 90.7 million acres, down 1.6 percent from last month’s projection. In a survey released in late March, farmers indicated they planned to sow 92.178 million acres with corn this year. The USDA will update its estimate of farmers’ intentions in a report on June 30.
‘Different’ Season
The USDA forecast the yield from this year’s crop at 158.7 bushels per acre, unchanged from a month ago and up from 152.8 bushels last year.
The “season is shaping up a little different to most with the USDA significantly cutting new U.S. crop harvested area and carry out stocks for 2011-2012,” beyond market expectations, the Rabobank analysts said in a report e-mailed today.
The USDA also projected record U.S. farm prices for next year, with corn fetching $6 to $7 a bushel on average in the year that begins Sept. 1, up from last month’s forecast of $5.50 to $6.50 and the current-year’s average of $5.20 to $5.50.
Chinese corn consumption in the marketing year that begins Oct. 1 is forecast to jump 5.2 percent to a record 181 million tons, outpacing projected record production of 178 million. China, the biggest buyer of soybeans, imported the most corn last year since 1996.
Wheat, Soybeans
Wheat for July delivery gained 0.3 percent to $7.475 a bushel, mostly recouping yesterday’s loss. The grain is about 40 cents cheaper than corn. Wheat is set to drop for a second week.
Stockpiles of wheat around the world will be 184.26 million tons at the end of the 2011-2012 season, the USDA said, raising its estimate from 181.26 million tons last month. That puts the stockpile-to-use ratio at 27.6 percent.
The estimate was less bullish for wheat prices because it shows that the ratio is “still comfortably above” the 20 percent in the 2007-2008 season, Mathews said.
Soybeans for July delivery, which has the biggest volume, were little changed at $13.9325 a bushel in Chicago, and were set for a 1.5 percent decline this week. The November delivery contract, which has the most open interest, was also little changed at $13.8625 a bushel.
To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net
To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net`
