U.S. grains: Corn posts steepest drop in nearly three years on USDA reports

Chicago | Reuters –– U.S. corn futures tumbled more than four per cent on Friday in the market’s steepest drop in nearly three years after the U.S. Department of Agriculture (USDA) estimated U.S. stocks and projected spring plantings above nearly all trade estimates.

Soybeans and wheat followed corn lower despite USDA’s lower-than-expected soy and spring wheat acreage projections and the agency’s forecast for the smallest area planted to all types of wheat on record.

U.S. President Donald Trump’s threat to close the U.S. border with Mexico, a top U.S. grain importer, next week added pressure late in the session.

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Although heavy flooding in key farm states, including major producers Iowa and Nebraska, is likely to shift farmers’ plantings over the coming weeks, USDA’s outlook served as a stark reminder of oversupplied grain markets.

“It’s impressive, in a matter of seconds, what a stocks and planted area report can do to take out three weeks of a bull market in corn,” said Terry Reilly, senior commodities analyst with Futures International.

“Over the next three months, I wouldn’t be surprised if we see a bear market in all three of these commodities unless a weather problem develops,” he said.

In its quarterly stocks report, USDA pegged domestic corn supplies as of March 1 at third biggest on record, wheat stocks were the second largest in 31 years and soybean stocks were the largest ever.

The government said U.S. farmers planned to plant 92.792 million acres of corn and 84.617 million acres of soybeans this spring. Its next acreage forecast is expected at the end of June.

Chicago Board of Trade May corn futures fell to a contract low of $3.56 a bushel and settled 17-1/2 cents lower at $3.56-1/2 a bushel (all figures US$). The 4.7 per cent drop was the steepest for a most-active corn contract since July 5, 2016.

July and September corn also posted a contract low and the new-crop December contract came within four cents of its contract low.

May soybeans were 5-1/4 cents lower at $8.84-1/4 a bushel, the lowest since Nov. 1.

Soybeans drew some underlying support from optimism that U.S.-China trade talks were progressing and after Chinese importers booked their second large U.S. soy purchase this month.

CBOT May wheat was down 6-3/4 cents at $4.57-3/4 a bushel.

For the first quarter, corn was down 4.9 per cent, soybeans were down 1.2 per cent and wheat was nine per cent lower.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago; additional reporting by Gus Trompiz in Paris and Colin Packham in Sydney.

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