by Agrimoney.com
Investors continued on Friday to attack US crop data which signalled far more plentiful supplies of corn than had been expected, criticising the estimates as inconsistent and difficult to tally with other evidence.
Chicago corn futures, which initially tumbled 12% on the data, showed signs of stabilising on Friday, with the July lot recouping 1% in morning trade.
An estimate by the US Department of Agriculture that American corn stocks were nearly 370m bushels higher last month than investors had expected "just doesn't add up" in implying a halving in use by livestock feeders year on year, Rabobank analysts said.
"While some substitution by wheat in the feed ration may have taken place at the start of June, we expect it would have been very limited, and certainly not sufficient to support such a low corn usage number," the bank said.
Jon Michalscheck at Benson Quinn Commodities said: "In 2010, the USDA was also noted to have found 300m bushels of corn although the market saw it magically disappear later in the year. So possibly the same act will take place this year."
'Flooding ignored'
However, most of the attacks centred on an estimate that US farmers sowed 92.3m acres with corn this spring, 1.5m acres more than the market expected, and 1.6m acres above a USDA forecast issued earlier this month.
"Just where they have found these acres is the question on everyone's lips," Jaime Nolan at broker FCStone's Dublin office said.
"The figures released seem to ignore flooding and difficulties faced by farmers during the planting season," Agritel, the Paris-based consultancy, said.
In North Dakota alone, while farmers were estimated to have lost out on 2.3m acres of sowings of all crops, data earlier in the week implied losses of more than 6m acres, Rabobank said.
Harvest-time puzzle
Even if these acres do turn out to have been planted – an issue on which the market will get a better idea next month when the USDA releases the results of a resurvey – some analysts raised questions over how many would be harvested, given losses to the spring's heavy river flooding.
The USDA, which three weeks ago made a 400,000-acre allowance for floods in the Ohio and Mississippi and Missouri river valleys, on Thursday reduced by 0.4 points to 8.0% its estimate for the proportion of corn plantings not making it to harvest.
"Over the last decade, the US corn crop has had give where abandonment has been equal to, or greater than 9%," Australia & New Zealand Bank said.
"Given the weather events so far this season, a 9-10% abandonment for 2011-12 isn't out of the question."
Given that a 1% change in abandonment equates to a change of roughly 150m bushels in production, "a higher abandonment rate could easily wipe out the higher [corn] stocks gained from last night's report".
'No need to ration'
Thursday's estimates, at face value, imply a significant easing in the squeeze on US corn supplies, by enough to deal a huge blow to prices of the grain.
The data signal "carryout numbers for 2011-12 back over 1.0bn bushels, implying no need to ration any more", Mike Mawdsley at Market 1 said.
"Larger supplies means not much reason to rally unless weather takes a turn for the worse."
However, other questions that analysts have over the estimates include the apparent inconsistency of higher-than-expected stocks with tight physical market and export supplies.
Some have raised questions over wheat stocks proving larger than expected too, given that the grain should be proving in greater demand if farmers are switching away from high-priced corn.
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