(Adds comments, updates prices)
By Ros Krasny
WASHINGTON, Jan 10 (Reuters) - U.S. corn stocks were below
expectations in December and 2013/14 carryout will be smaller
than expected, the U.S. Department of Agriculture said on
Friday, causing corn futures prices to jump as much as 5
The USDA forecast 1.631 billion bushels of corn will remain
on hand when the new U.S. crop is ready for harvest by late
summer, roughly double the drought-affected level of a year ago
but down from 1.792 billion projected in December.
The corn stocks-to-use ratio for 2013/14 tightened to 12.4
percent from 13.7 percent forecast a month ago, suggesting corn
was underpriced ahead of the report. That caught many traders
leaning the wrong way after the market set contract lows just
one day earlier.
"The big buffer, the big cushion that we had is not as big
as we had previously thought," said Don Roose, analyst at U.S.
Chicago corn futures closed up almost 5 percent,
advancing 2 percent on the week. Soybeans pared gains to
rise about 0.6 percent and wheat was down almost 3 percent
at new contract lows as traders focused on rising U.S. and world
"No doubt about it, the numbers were a shocker on the corn,
they were bearish on the wheat, but I'm not sure they were 20
cents bearish," said Charlie Sernatinger, analyst at ED&F Man
USDA also showed that recent falling prices caused farmers
to turn away from wheat plantings in the U.S. Midwest.
Total winter wheat seeded area for 2014 was down 3 percent
from a year ago at 41.9 million acres, with seedings of hard red
winter wheat up and soft red winter wheat down sharply.
China has raised the ire of U.S. exporters by rejecting many
cargoes of U.S. corn. On Friday, USDA raised China's 2013/14
corn crop by 6 million tonnes to 217 million, and knocked 2
million tonnes off projected imports to 5 million.
USDA's battery of reports carried few surprises for
soybeans, where the bottom line - projected 2013/14 U.S. ending
stocks - was unchanged, but Brazil's crop was raised again.
Quarterly corn stocks are often one of the most market
moving data points from USDA, although Friday's figure was not
as much of an outlier as some. As of Dec. 1, after the first
quarter of the marketing year, the United States had 10.426
billion bushels of corn on hand, below market expectations
averaging 10.790 billion but within the range of guesses.
USDA said the figure suggests corn usage in the Sep-Nov
quarter of 4.32 billion bushels, up 15.5 percent on the year, as
sharply lower prices drew out export and feed demand.
In its first crop forecasts in two months, USDA pegged the
2013 U.S. corn crop at 13.925 billion bushels, still a record
high but below the average trade guess of 14.066 billion
bushels. That confounded the corn market's recent expectation
that big crops, generally, only get bigger.
Corn yields of 158.8 bushels per acre were down from 160.4
estimated in November and also lower than the trade forecast.
"The whisper going in here was the USDA could come up with a
163-164 (bushel per acre corn yield). The fact that it went down
was particularly surprising to a lot of the traders ... you
definitely caught the market leaning the wrong way," said Jim
Gerlach of A/C Trading.
Lance Honig, chief of the crops branch for USDA's National
Agricultural Statistics Service, said crop scouts didn't pick up
common themes to explain the small drop in yields.
"It just turned out those yields were just a little bit
lower than what they had expected," Honig said.
Soybean production at a record high 3.289 billion bushels,
was up 1 percent from November but close to the average guess of
3.279 billion. Yields were left unchanged from November at 43.3
bushels per acre but harvested acreage was higher.
As debate rages about the fate of the ethanol industry given
a possible cut to the Renewable Fuels Standard mandate for 2014,
USDA raised its forecast of corn-for-ethanol usage by 50 million
bushels, to 5 billion bushels, reflecting continued strong
BIG DROP IN MIDWEST WHEAT SEEDING
Area seeded to soft red winter wheat, the variety traded in
Chicago, fell 16 percent on the year to 8.44 million acres, with
decreases seen in most states and especially in Arkansas and
Mississippi, USDA said. By contrast, seedings of hard red winter
wheat rose 2 percent to 30.1 million acres.
Large decreases in HRW wheat acreage were logged in Kansas,
Oklahoma and South Dakota, while North Dakota growers seeded a
record high area.
USDA noted that HRW wheat conditions by the end of November
were improved from a year ago. It did not address the recent
record cold snap in much of the wheat belt.
Overriding potential support from lower wheat seedings was a
bearish demand picture. U.S. wheat disappearance for Sep-Nov was
407 million bushels, down 6 percent from a year ago, and Dec. 1
stocks were above the average trade guess at 1.463 billion
That pushed up projected 2013/14 ending stocks by 33 million
bushels, of which 28 million was soft red winter wheat.
"The wheat market reacted to the (U.S.) seeding number, but
then started looking at the ending stocks being up for the
United States and also for the world. That combination doesn't
bode well for the U.S, to say the least, as far as exports,"
said Shawn McCambridge, analyst at Jefferies Bache.
Brazil will harvest a record 89 million tonnes of soybeans,
up 1 million tonnes on the month. The South American powerhouse
continues to vie for the title of "world's largest soybean
grower." The United States, with a crop of 89.5 million tonnes,
narrowly held the edge.
The U.S. soybean market is finding plenty of demand to
absorb the record crop, USDA said. It raised exports and crush
by a combined 30 million bushels from December. Ending stocks
were steady at 150 million bushels, barely up from 141 million a
year ago, showing little margin for error in the 2014 growing
CHINA'S CORN CROP UP, PROJECTED IMPORTS DOWN
The hike to China's corn crop reflected a revision by
Chinese authorities and a review of growing-season weather, USDA
"Recent rejections of U.S. corn shipments by China and
larger domestic corn supplies in China are expected to limit
imports," it added.
China's wheat crop was also raised, and world wheat carryout
for 2013/14 rose. Higher imports were projected for Egypt, Japan
and Syria, USDA said.
Global soybean stocks of 72.33 million for 2013/14 were
higher than market expectations.
(Reporting by Ros Krasny, additional reporting by Mark
Weinraub, Tom Polansek and Julie Ingwersen in Chicago; Editing
by Chris Reese)