Corn Plummets On USDA Report

Tyler Durden's picture

Corn traders, especially of a bullish persuasion, are being carted off trading floors feet first after a report by the USDA crushed expectations that there is a supply shortage. Reuters reports: "Corn futures plummeted more than 10 percent in early trading on Thursday after a U.S. government report said farmers were able to seed far more corn acres this spring than many analysts expected and that supplies are not as tight as many thought." And while the front month dropped by the maximum allowed limit, that did not stop the July contract, which has entered the delivery period and is trading without limits, to plunge by a whopping 70 cents. "The declines leave corn with the biggest monthly fall since June 2009." This is one time when those listening to Goldman would have been a well-advised action. From Damien Courvalin's note released yesterday: "We expect corn and cotton acreage will be higher than projected by the June WASDE, to the detriment of soybeans."

The carnage charted:

From Reuters:

Despite excessively wet conditions, a scramble to get corn seeded in key growing areas that was fueled by high prices has set the stage for a potentially record-large corn crop, and conversely a smaller soybean crop, according to the report issued Thursday by the U.S. Department of Agriculture.

"There are some big surprises in this report," said Karl Setzer, commodity Trading Advisor for MaxYield Cooperative in West Bend, Iowa. "All in all, what this shows us in the quarterly stocks report, we are not using grain at the pace we thought we were."

USDA said farmers planted 92.282 million acres with corn this spring, above an average trade estimate for 90.767 million acres and well above the USDA's June 10 forecast of 90.700 million acres.

The department estimated quarterly corn stocks as of June 1 at 3.670 billion bushels, above an average trade estimate for 3.302 billion and compared with 4.310 billion a year ago.

Traders said the fact that farmers were able to get so much corn in the ground despite flooding and heavy rainfall through the U.S. Midwest underscored how recent high prices pushed farmers to plant corn over soybeans despite the adverse conditions.

"Getting this much acreage planted is a surprise," said Shawn McCambridge, an analyst with Prudential Bache Commodities.

That said, this move is likely a buying opportunity. Back to the mentioned Goldman report:

Adverse weather has significantly hindered US planting this spring

Adverse weather conditions impaired US crop planting this spring and we expect corn acreage to be lower than March intentions although higher than projected in the June WASDE given the strong returns offered by new crop prices. We also expect cotton acreage to be higher than intentions and believe that higher corn and cotton acreage will result in lower soybean acreage; we note that the USDA has shown a bias in overestimating soybean acreage by 0.3 million acres on average in its June estimate. Tomorrow’s acreage estimates will likely be revised in August as the USDA conducted its June survey with some planting still to occur and the impact of the Missouri River flooding still unknown. Finally, although weather from July to September is essential to determining production, we believe that this spring’s delayed planting, poor weather and flooding will also limit production potential as it translates into higher abandonment and lower yields. See Hit to acreage, abandonment, yield lowers US production outlook, June 13, 2011, and the updated table below for our expectations.

Uncertainty on feed demand and grain stocks remains high

Grain stocks have often generated large surprises and markets will be very sensitive this year given critically low inventory. Consensus expects lower stocks vs. last year for corn and wheat and higher for soybeans. We believe that low corn stocks would require sharply higher prices as the recent selloff likely boosted demand for feed, exports and ethanol production.


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chumbawamba's picture

Thank the gods, I was wondering where we'd get all our high fructose corn syrup.

Back to the TeeVee.

I am Chumbawamba.

Fukushima Sam's picture

But how much of this corn will succumb to mold due to the wet conditions?

A kernal planted is not the same as an ear harvested.

Cathartes Aura's picture

"High fructose corn syrup Reality TeeVee
Taylor Swift and Burger King Jesus and cheap gasoline. . ."

SWRichmond's picture

Beeks!  Where the Hell is Beeks?

Long-John-Silver's picture

Corn: It's Silver you can eat or burn in your car.


Welcome to the wonderful world of manipulation; Corn Bugs.

caconhma's picture

Now comes a BIG QE3.

There are no ways around, i.e., a terrible deflation is all over. Real estate, food (corn, wheat, soybean, etc.,), and PM prices all plummeted.

Now, Bernanke can monetize the entire US debt without any limitations. WOW!

Few bogus numbers from the US government, and bingo, the FED got a home-run.

CitizenPete's picture

Corn Flakes


El CornHolios - now they need some TP for their bunghole. 

SheepDog-One's picture

Clarence BEEEEEEEEKS you gave us the wrong crop report, turn those machines back onnnnnnnnn!!!

buzzsaw99's picture

ot - did anyone notice that jamie dimon quietly sold his jpm shares back in january? They loudly proclaimed when he bought $15M at $25 but nothing about him selling.

Silver Dreamer's picture

With most corn being GMO these days, who in their right mind is eating it anyway?  I avoid corn based foods as if it were poison.

Vic Vinegar's picture

Makes you there a brent crude-wti spread on Monsanto corn vs. the real thing?

Fukushima Sam's picture

Not to fear, the radionucleides from Fukushima will genetically scramble the GMO corn to make something fantastic!  Add two negatives to get a positive!

huggy_in_london's picture

Do you mean the corn bubble finally popped?  

NotApplicable's picture

Right as Uncle Sugar is turning off the ethanol subsidies.

Isn't it just wonderful how DC distorts markets, first one way, then the other?

mayhem_korner's picture

"Uncle Sugar"?  Sounds like a very icky man...

SheepDog-One's picture

'Biggest price decline since 2009' I missing something here or is the price back to where it was....2 days ago?

Looks to me like its the biggest price decline....since the matching decline a few days ago on Jun 24 2011.

Agent P's picture

Get those traders back in here!  Turn those machines back on!

SheepDog-One's picture

THIS is how QE3 will go down....various bubbles bursting in equities and commodities, all shorted ahead of time by PD's of course, proceeds go to support bonds.


Cassandra Syndrome's picture

Oh dear, since when did physical quantities matter to the electronic and paper trades around the globe? Oh yeah since QE2 ended....

buzzsaw99's picture

buy the planting season, sell the harvest. an old speculator trick.

huggy_in_london's picture

yep, that trade works almost every year when spread against wheat.  But is super volatile

dcb's picture

It's kinda silly. it doesn't matter what you seed, and with the flooding and weather it's what you can harvest. maybe a good buy signal. add to that other extreme weather events, and I may take a look at this space now.

SheepDog-One's picture

Yea 'acreage planted' in soon to be flooded farmland is counting your eggs before the hens are hatched.

espirit's picture

This smells bad, and I doubt prices stay down very long.

"Five of South America’s major fruit-producing countries have witnessed an historic cold snap over the last week, including a snowstorm in the Argentine citrus region of Tucumán. Low temperatures were registered in Brazil, Uruguay, Argentina, Chile, Peru and Bolivia. The blizzard hit Tucumán on Friday in conditions not seen since 1920, while the Brazilian state of Santa Caterina recorded a wind chill of -25°C (-13°F). It will take time before the full consequences for crops can be seen across the continent, but Brazilian press reported Santa Caterina’s agriculture and livestock were seriously affected and 80 people have died."

SheepDog-One's picture

OT but hillarious, anyone catch the MSNBC reporter this morning who thought his mic was off and called Obama a dick? :D

SDRII's picture

Exactly why would one not view this development through the same scope as the IEA release?

The Swedish Chef's picture

I have 10 000 corn warrants that are basically worthless now... Bought at 1 krona, now they are down to 0,18. Such is life and such is trading...


I was hoping for some bad weather, Ben is always talking about the weather pushing up different assets, but no luck...

CitizenPete's picture

You can not escape the almighty Bung Hole, El Cornholio.

b_thunder's picture

President of Exchange: [Randolph Duke has just collapsed with shock] Mortimer, your brother is not well. We better call an ambulance.
Mortimer Duke: Fuck him! Now, you listen to me! I want trading reopened right now. Get those brokers back in here! Turn those machines back on!
[shouts - it echoes pathetically throughout the trading hall]
Mortimer Duke: Turn those machines back on!


Randolph Duke: [being wheeled out on a stretcher] Where's Beeks? Where in the hell is Beeks?
Billy Ray Valentine: [to Winthrope] Yeah, I forgot about that guy.


SheepDog-One's picture

To scene with Beeks in a gorilla suit getting kornholed by a real gorilla.

fuu's picture

They should hold onto those positions, the radiation releases will shrink the available crop in no time!

Lazane's picture

seems around these parts in the so called corn belt of the republic, I am surrounded by bean fields not the usual corn fields. It was way too wet and nasty early to get the corn planted, so the farmer planted beans. It's another market ruse, my take is dump the beans, buy all the corn you can stuff into a elevator and wait for harvest, you will then see what the scarecrow sees. 

wisefool's picture

see what the scarecrow sees


"The crops always go in. The crops always come out."

qmhedging's picture

so many people play the long soy short corn game

can't trust USDA much

SheepDog-One's picture

BTW, kinda late for corn planting isnt it? Last week in June? Or am I missing something here from an event that normally takes place 2 months ago but only reported on 2 months later....what is this the early 1900's?

Turd Ferguson's picture

Wow, what a fucking beating! But I'll be looking to buy the Nov beans at around 12.75. Its going to be a very hot and very dry late summer.

Flyingtrader's picture

SOLD!  I'll  take the other side of that trade all day long... how much do you want?

SheepDog-One's picture

Dry....well dont forget the impending massive floods Turd.

Turd Ferguson's picture

The floods have no impact on central IA and IL.