Corn futures tumbled after a U.S. government report showed that farmers plan to sow 93.6 million acres of the crop in 2016, exceeding all analysts’ estimates and boosting prospects for higher supplies after this year’s harvest.
The acreage would represent a 6.4 percent increase over last year’s plantings and be the most since 2013, according to a report Thursday by the U.S. Department of Agriculture. In contrast, farmers also told the government they intend to reduce soybean planting to 82.2 million acres, compared with 82.65 million acres in 2015.
The increase in corn acreage “is mainly due to the expectation of higher returns in 2016 compared with other crops,” the USDA said.
“This is still a shock to the system when you couple it with the huge quarterly stocks that we’re sitting on,” Dean Heffta, a senior director at risk-management firm Water Street Solutions in Peoria, Illinois, said by phone Thursday.
Corn futures for May delivery fell as much as 3.9 percent and were down 3.8 percent at $3.5325 a bushel at 11:27 a.m. on the Chicago Board of Trade. Soybeans for May delivery were briefly lower before rising 0.1 percent to $9.0975 a bushel.
U.S. growers are facing a drop in profit for the third straight year to $54.8 billion as persistent surpluses depress crop and livestock prices, the USDA said in February. The hard times follow an era of record profit that peaked at $123.3 billion in 2013, when rising global demand combined with a domestic drought that crimped production.
Ample harvests since then have boosted supplies of major U.S. crops. Corn inventories as of March 1 in the U.S., the world’s biggest grower, rose 0.8 percent from a year earlier to 7.81 billion bushels, the government said in a separate report Thursday. That’s the highest for this time of year since 1987. Analysts surveyed by Bloomberg expected 7.798 billion, on average.
Total U.S. wheat planted for harvest in 2016 was estimated at 49.559 million acres, the USDA also said, down from 54.644 million last year and below the lowest estimate in the Bloomberg survey.
Soybean supplies on March 1 jumped 15 percent to 1.53 billion bushels, less than analysts estimated, while wheat reserves rose 20 percent to 1.37 billion bushels, more than the survey forecast.
Corn is the most valuable U.S. crop, followed by soybeans, hay and wheat, USDA data show.
Cotton acreage was projected at 9.56 million acres, 11 percent more than in 2015.