Grains tumble

US grains fell on Tuesday as investors across a broad range of commodities bailed out of risk assets, yanking soyaabeans back down from an early rise and close to their highest since records were hit in 2008. Corn fell more than 2 percent to a one-week low, with additional pressure from a US Department of Agriculture supply/demand report that pegged US ending stocks of corn at 10 percent more than an average of analysts' estimates.
Soyaabeans rose to a seven-month high in early trade, then gave up the gains to head lower. Wheat fell on strong prospects for the 2012 US winter wheat crop and despite a mildly supportive wheat stocks number in the USDA's report. "The dollar is moving higher, equity prices are sloppy and we're making new lows in the S&Ps. ... The lack of change in the (US corn ending) stocks made corn vulnerable, and as the dollar began to push higher, the general downdraft in commodities finally spread into the grain room," said Sterling Smith, analyst for Country Hedging.
CBOT May corn was down 14-1/4 cents per bushel at $6.34-3/4, May soya was down 5 at $14.26 and May wheat was down 17-1/4 cents at $6.25-3/4. The USDA served up a bearish surprise for the market when it forecast the supply of corn would total 801 million bushels at the end of August, when the current marketing year (2011/12) closes.
Although the total would be the lowest in 16 years, it was unchanged from the USDA's forecast in March and defied analysts' estimates for a 10 percent downward revision to 721 million bushels. "My first question is, did the USDA take the month off? For the corn, they kept everything the same but they put in their comments that they are looking at early 2012 corn usage to take up the slack for 2011, which is kind of confusing since they supposedly keep that separate," said Mike Zuzolo, analyst for Global Commodity Analytics in Lafayette, Indiana.
Most analysts had expected the USDA to trim its corn stocks estimate since the government in its quarterly stocks report at the end of March had pegged the corn supply below estimates. That report triggered a limit-up move of 40 cents per bushel in CBOT corn futures.
"It is still a little hard to explain how you have higher-than-expected second-quarter (corn) usage but make no changes on your balance sheet. We will go right back to trading the weather," said Shawn McCambridge, analyst for Jefferies Bache. The US Department of Agriculture on Tuesday reduced its outlook for soyabean production in Brazil by 12 percent and in Argentina by 13 percent from its forecast in December, when Chicago Board of Trade soyaabeans began a 32 percent surge.
The USDA's supply-demand report pegged Brazil's soyabean crop at 66 million tonnes and Argentina's at 45 million, both below trade expectations. The smaller crops in South America have helped to boost exports from the United States, with the sale of 165,000 tonnes of soyaabeans to China announced by the USDA on Tuesday giving the market an additional boost.
The USDA forecast the ending stocks of US soyaabeans at 250 million bushels, down from 275 million in its March outlook and about in line with the average of analysts' estimates for 246 million. The USDA lowered its outlook for US wheat ending stocks to 793 million bushels from the March outlook for 825 million.