Corn extends rally after deep cut to US planting estimate

PARIS/SINGAPORE: Chicago corn futures extended a rally on Wednesday to their highest in more than three months after a steeper than expected reduction to the US government's corn acreage estimate.

Soybeans and wheat stayed firm after the US Department of Agriculture's (USDA) closely followed planting report on Tuesday also showed smaller acreage for soy and winter wheat than had been expected.

The USDA estimated farmers planted 92 million acres of corn this spring. That was well short of analyst expectations and 5 million acres below the USDA's March forecast of 97 million acres, marking the biggest March-to-June drop since 1983.

"This makes it questionable whether a record crop - that had almost been regarded as a dead cert - will in fact be harvested after all," Commerzbank said of corn.

The USDA also pegged acreage for soybeans and most other major crops below market consensus, suggesting farmers were discouraged by a coronavirus epidemic that has roiled markets.

"All these lower acreage numbers had people wondering what happened to the acres and to which crop or crops they were reallocated. But the acres were not planted at all," Karen Braun, a market analyst for Reuters, wrote in a column.

The agency pegged quarterly US corn stocks above analyst estimates in a reminder of the drag on demand from the coronavirus crisis.

The most-active corn contract on the Chicago Board of Trade (CBOT) was up 1.2% by 1048 GMT at $3.54-3/4 a bushel, after reaching its highest since March 20 at $3.55.

CBOT soybeans added 0.5% to $8.86-1/2 a bushel and wheat was up 0.6% at $4.94-3/4 a bushel.

Weather remained a preoccupation as US corn and soybeans approach key summer growth stages while wheat harvesting progresses across the northern hemisphere.

"With the USDA reports out of the way, traders will focus on weather forecasts and Chinese demand for the next direction," brokerage Allendale said in a note.