Corn futures in Chicago plunged to the lowest levels in more than three months after the government reported higher than expected acreage and stockpiles, indicating easing pressure on tight grain supplies and relief for livestock producers squeezed by soaring feed costs.
The nation’s farmers sowed 92.28 million acres to corn this year, up 4.6 percent from 2010 plantings and the second-highest total in the past 67 years, the U.S. Department of Agriculture said in its Acreage report June 30.
Grain traders and analysts were caught by surprise by the plantings figure, which exceeded expectations by about 1.5 million acres, based on a Dow Jones Newswires survey. CME Group corn futures fell the daily 30-cent trading limit in some contracts and may have further to drop, meaning a record rally since the beginning of 2010 is probably finished, some analysts said.
“The party is over for the corn bulls,” Chad Henderson, an analyst with Prime-Ag Consultants, Inc., in Brookfield, Wis., said in a June 30 e-mail.
In trading June 30, corn futures for July delivery fell 69 cents, or nearly 10 percent, to $6.29 a bushel, after sinking as low as $6.15 ¼, the lowest price for a closest-to-expiration contract since $6.08 in mid-March. The 69-cent decline was the second-largest one-day price drop in the history of the corn futures contract, next to a drop of $1.31 ½ in July 1996, according to Garrett Toay of AgTraderTalk.com in Clive, Ia. The front-month contract trades with no price limits.
December corn futures, which reflect expectations for this fall’s harvest, fell 30 cents, the maximum initial daily move allowed by the exchange, to $6.20 ½, a decline of 14 percent from a contract-high settlement of $7.14 June 9.
Corn futures are down 20 percent from a June 10 settlement of $7.87, an all-time closing high for a front-month contract, but still up 78 percent from $3.54 ¼ a year ago.
The December contract “could have difficulty holding a $6 handle,” Mike Zuzolo, president of Global Commodity Analytics & Consulting LLC, said in a report.
Estimated corn plantings for 2011 would trail only the 93.53 million acres seeded in 2007 as the highest since 1944, according to the USDA report. In a separate June 30 report, the USDA said nationwide corn stockpiles at the beginning of this month totaled 3.67 billion bushels, down 15 percent from a year earlier but higher than analysts’ expectations by about 350 million bushels.