--No major surprises in USDA reports; USDA estimates higher corn and soybean plantings --Traders look past reports and keep trading on worsening drought, favorable outside markets --USDA estimate for spring-wheat planting lower than expected By Owen Fletcher and Kristina Peterson CHICAGO--U.S. corn and soy futures rose Friday as traders looked past higher-than-expected federal government forecasts for domestic corn and soybean plantings, focusing instead on worsening drought conditions in the Farm Belt and favorable outside markets. A lack of major surprises in the closely-watched U.S. Department of Agriculture estimates led market participants to keep trading on expectations for hot, dry weather in the Midwest to stress crops and reduce yields. Sharply higher crude oil and a plummeting dollar also boosted grain and soy futures Friday morning, amid optimism about the euro zone's efforts to ease its sovereign-debt woes.
The USDA raised its estimate for the amount of land on which farmers planted corn this year to 96.4 million acres, topping analysts' expectations. Farmers planted 5% more acres of corn this year than last year, in the highest planted acreage since 1937, the agency said. Analysts polled earlier by Dow Jones Newswires had on average expected a forecast of 95.96 million acres. The USDA said unusually warm spring weather and favorable field conditions this year led farmers to plant corn at the quickest pace on record, with 96% of the acreage planted by May 20. The government estimated record corn acreage in Idaho, Minnesota, Nevada, North Dakota, Oregon and South Dakota. The USDA also raised its estimate of planted soybean acreage to 76.1 million acres this year, surpassing the average analyst prediction of 75.58 million acres. Soybean plantings are up 1% from last year, the USDA said. The government reports come at the end of a week when corn and soybean prices have jumped on expectations that drought conditions in much of the Midwest will stress crops. Earlier this week, the USDA reported that 56% of the country's corn crop was in good-to-excellent condition, down seven percentage points from a week earlier and marking the lowest ratings for that time of year since 1988. The Agriculture Department on Friday also nudged up its estimate of spring-wheat plantings to 12.0 million acres, up slightly from its last forecast of 11.98 million acres in March, but below analysts' expectations for 12.66 million acres of spring-wheat plantings.
In its report on current supplies of corn and other commodities as of June 1, the USDA said stocks of corn and wheat each fell 14% from the previous year, while stores of soybeans had climbed 8% in the same period. Analysts had expected inventories of both corn and wheat to be lower than a year earlier and soybean stores to rise. The USDA said corn inventories declined to 3.15 billion bushels, below analysts' expectations that corn inventories would slip to 3.182 billion bushels, down from 3.67 billion bushels a year earlier. The estimate of corn inventories may have helped lift futures, traders said. "The corn stocks number should push corn higher from here, which will pull wheat," said Doug Bergman, agricultural derivatives specialist with RCM Asset Management in Chicago. Inventories of wheat declined to 743 million bushels, but topped analysts' predictions that wheat stores would fall to 726 million bushels, down from 862 million bushels last year. Meanwhile, the rise in soybean inventories to 667 million bushels surpassed analysts' predictions that stocks of soybeans would rise to 640 million bushels, up from 619 million bushels a year earlier.