Corn drops

US corn fell more than 1 percent on Tuesday, its biggest slide in two weeks, in reaction to forecasters predicting more rain in the Midwest grain belt and to the US government keeping corn stocks unchanged. Traders had expected a reduction in stocks. Rain will help the corn crop after two weeks of hot, dry conditions. A bumper corn crop is needed to replenish razor-thin US stocks.
The US Department of Agriculture's supply-demand report Tuesday morning also pressured corn prices. The report was released for the first time when the markets were open, including the open outcry platform in Chicago. Soyabeans rose after USDA trimmed its projection of US ending stocks due to brisk export demand, but moved lower on bearish weather forecasts, only to recoup losses and close higher. Wheat fell after the agency's US winter wheat production estimate exceeded analysts' forecasts. Declines increased later in the session.
Corn traded lower prior to the release of the government's report at 7:30 am CDT (1230 GMT). Prices turned higher briefly before sliding on the bearish stocks data and bearish weather forecasts. "I think the ending stocks numbers will hold steady for now, unless we see a big increase in China's imports. They may bump up the feed side of corn usage because of the wide spread now between wheat and corn and that may show up in the June 29th quarterly stocks report," said Shawn McCambridge, analyst for Jefferies Bache.
Chicago Board of Trade corn for July delivery was down 8 cents at $5.84 a bushel, July soyabeans were up 10-1/4 at $14.35 and wheat for July delivery was down 14-1/2 cents at $6.16. "The lack of any change for the corn is the biggest surprise for the fact that USDA is going to wait yet another month to put a realistic corn-for-feed number out there," said Rich Nelson, director of research for Allendale Inc. "What they did was drop exports and raise ethanol, and that's what we have to work with."
USDA's report put this season's US corn supply at 851 million bushels, unchanged from its May estimate but still a 16-year low. Next year's stocks were seen to more than double at 1.881 billion bushels. The numbers were a little above an average of analysts' estimates in a Reuters poll. In contrast, USDA made a slight downward revision in its outlook for wheat and soyabean ending stocks for both old- and new-crop marketing years, but the revisions were close to the analyst averages.