By Luzi Ann Javier
July 23 (Bloomberg) -- Corn futures jumped in Chicago on concern the U.S. may lower its production estimate and after output in Argentina, the world’s second-biggest exporter last year, slumped 40 percent in the 2008-2009 season.
The U.S. Department of Agriculture said yesterday it will survey farmers to measure the impact of cold, wet weather that delayed planting. The USDA estimated on June 30 that corn was planted on about 87 million acres, up 1.2 percent, based on a survey done before some of the adverse weather hindered sowing.
“That announcement has probably got the market expecting their ending stocks for 2009-2010 will be lower than their last estimate,” Toby Hassall, a research analyst at Commodity Warrants Asia Pty. in Sydney said by phone today. The USDA “has a history” of overestimating stockpiles initially, he said.
Corn for December delivery jumped as much as 3.9 percent to $3.3175 a bushel on the Chicago Board of Trade, the biggest intraday gain for the most-active contract since June 5. Futures touched $3.1475 a bushel yesterday, the lowest since Dec. 8. The contract traded at $3.2725 a bushel, up 2.5 percent, at 3:07 p.m. Singapore time.
Corn has dropped 30 percent from an eight-month high of $4.7175 on June 10 as favorable weather improved yield prospects in the biggest growing region in the U.S., the world’s largest producer and exporter.
Futures also surged today on concern global supplies may be lower than earlier estimates, after Argentina said its production of the grain plunged to the lowest since 1995.
Argentina Production
Argentina’s output fell to 12.5 million tons in 2008-2009 from the previous season, the Buenos Aires Cereals Exchange said yesterday. Drought and higher fertilizer costs reduced production amid conflicts between farmers and the government over export taxes.
“If estimates of South American production are reduced, then I guess it tightens the global balance sheet,” Hassall said. “That might be providing some support,” he said.
Argentina will have rainfall and colder weather, raising the risk of frost at many of the nation’s farms, the cereals exchange said yesterday in its weather forecast for July 22-28.
The USDA estimated July 10 that U.S. inventory before the 2010 harvest will rise to 44.97 million tons, up 9 percent from 41.26 million tons a year earlier. Production was forecast to rise 1.6 percent to 312.2 million tons in the harvest that begins September.
USDA Estimates
USDA estimates to be released Aug. 12, will include the results of the survey of U.S. farmers and the latest outlook for global grain production, consumption, trade and inventory.
Wheat and soybean futures also rose as the Dollar Index, which tracks the value of the greenback against six major currencies, traded near the lowest in seven weeks. The gauge was at 78.689 at 3:03 p.m. Singapore time.
Wheat for September delivery added as much as 1.5 percent to $5.30 a bushel in Chicago, after closing 2.4 percent lower yesterday. The most-active contract traded at $5.2575 a bushel, up 0.7 percent at 3:05 p.m. Singapore time.
Soybeans for November delivery gained 0.8 percent to $9.155 a bushel, advancing for a second day.
To contact the reporter on this story: Luzi Ann Javier in Singapore at javier@bloomberg.net
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