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U.S. corn, soy slide on big USDA stocks view

U.S. corn futures fell about two per cent on Friday after the government forecast a record crop that would bolster U.S. stocks to more than two billion bushels at the end of next season, above trade expectations, despite reduced yields due to late planting.

Soybean futures slid modestly, halting a three-day rally, as the U.S. Agriculture Department said a record-large U.S. harvest would more than double supplies of the oilseed next season after three straight years of tight supplies.

Wheat prices dropped nearly three per cent in the steepest drop in almost four weeks as the USDA forecast global supplies well above trade expectations and on spillover pressure from sinking corn.

Although grain stocks in the United States remained very tight, investors were increasingly focusing on the likelihood that U.S. production would handily recover from the worst U.S. drought since the 1930s last summer.

“We’ve certainly got some tightness in old-crop corn and soybeans, but with each day that passes the market is getting more comfortable with that,” said Brian Basting, analyst at Advance Trading in Bloomington, Illinois.

“The combination of the USDA numbers and some better planting weather prospects next week are enough to offset Thursday’s gains,” he said.

Drier weather by the weekend into early next week will boost U.S. corn plantings that have fallen to the slowest pace in nearly three decades, said John Dee, meteorologist for Global Weather Monitoring.

In its first projection of the fall harvest and 2013-14 balance sheets, USDA said the corn crop would be a record 14.14 billion bushels despite a late start to the planting season that will lower yields.

U.S. corn ending stocks for 2013-14 would hit 2.004 billion bushels, USDA said, nearly triple the 759 million forecast for the Aug. 31 end of this marketing year. The forecast was also above the trade estimate for 1.993 billion and the highest in nine years.

U.S. soybean production was projected at a record 3.39 billion bushels with 2013-14 end stocks more than doubling to 265 million bushels from the 125 million estimated for the end of this season. The forecast was above trade expectations for 236 million bushels.

“The ending stocks figure is a huge number for corn and a big number for soybeans, above what the trade was expecting,” said Brian Hoops, president of Midwest Market Solutions.

“The trade has had a bearish reaction to it. There is nothing in this report to say it’s bullish.”

Chicago Board of Trade July corn fell 12-1/2 cents, or 1.9 per cent, to $6.36-1/4 a bushel and new-crop December fell 12 cents, or 2.2 per cent, to $5.29-1/2 a bushel. In the week, the July contract dropped 3.8 per cent, the most in five weeks, and December shed 4.3 per cent, the most in six weeks.

CBOT July soybeans fell 9-3/4 cents, or 0.7 per cent, to $13.99 a bushel on Friday but the contract ended up 0.8 per cent in the week. New-crop November shed 13-1/2 cents to settle at $12.05-1/2, a 1.1 per cent daily drop and a 1.3 per cent weekly decline.

CBOT July wheat futures dropped 19-1/4 cents, or 2.7 per cent, to $7.04-1/4 a bushel. The contract was down 2.3 per cent on the week, its third drop in the past four weeks.

Wheat was pressured by USDA’s larger-than-expected 2013-14 world stocks forecast of 186.38 million tonnes, about two million above pre-report projections, and a massive 45-million-tonne year-on-year increase in global production amid a rebound in output from the Black Sea region.

Commodity funds sold a net 11,000 corn contracts on the day, as well as 5,000 contracts each of soybeans and wheat, trade sources estimated.

— Karl Plume reports for Reuters from Chicago.

Related story:
McMillan: Corn production set to soar, May 10, 2013

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