CBOT corn futures slump on surprise from USDA stocks report

By P.J. Huffstutter

CHICAGO, Sept 30 (Reuters) - Chicago Board of Trade corn futures dropped sharply on Wednesday as investors scrambled to liquidate their positions, after the US Department of Agriculture reported that US farmers and grain handlers had 35% more corn in storage as of September 1 than a year earlier.

Corn stocks reached a seven-year high of 2.095 billion bushels for September 1, up from 1.551 billion a year ago, the USDA said in a quarterly report. Analysts on average had expected the agency to report 1.918 billion bushels, according to a Reuters survey.

The bigger-than-expected increase knocked down CBOT corn futures , with the most-active December contract dropping at one point to a low of $5.01 a bushel, near the key psychological level of $5.00 a bushel and the contract's lowest price since August 21.

The surprising corn news may be an indication that feed demand was less than traders had anticipated, said Craig Turner, commodity risk management consultant at StoneX. Still, the day's sharp drop in corn futures was equally surprising, he said.

"It's overdone, the market response to this report," Turner said. "The funds were just so long for corn. ... I think there are some people throwing in the towel, and stops getting hit, and some technical systems are getting triggered."

The most-active corn contract on the CBOT fell 3.69% to $5.02-3/4 a bushel by 11:55 a.m. CDT (1655 GMT).

CBOT wheat futures followed corn lower, as traders adjusted positions before the end of the month and quarter. Meanwhile, CBOT soybean futures were mixed, amid continued pressure after soybeans were left out of a tariff-reduction list issued following last week's summit between the leaders of both countries, dampening hopes of renewed purchases by private Chinese crushers of US supplies.

Some market analysts said there was growing concern about the quality of the corn crop, both in storage and crops currently waiting to be harvested in the field. Rain has delayed harvesting in the western Midwest, forcing some soybean processors to offer hefty premiums for immediate deliveries of the oilseed and others to scale back operations due to scarce supplies.

CBOT soybean futures were up 0.12% at $12.99-1/4 a bushel, while CBOT wheat was down 2.45% to $6.75-3/4 a bushel.

The wheat market also remained focused on diplomatic efforts to ease disruptions to Black Sea exports, traders said.

Ukraine's wheat exports may decline in October and November as corn shipments rise amid constrained logistics, Ukraine's largest farming union (UAC) said. UAC also warned that plans to and processed products could leave farmers with excessive grain stocks and sharply lower incomes.