Grain futures edge lower on U.S. shutdown, bigger-than-expected inventories

Grain futures fell on Wednesday on concern that the U.S. government shutdown will impair functioning of the U.S. Department of Agriculture, which would dampen overseas demand after a report showed on Monday bigger-than-expected stockpiles of corn and soybeans.

On the Chicago Board of Trade, corn futures for delivery in December fell by 0.69% to $4.3538 per bushel at 9:52 GMT. Prices fell to a new 38-month low of $4.3513 per bushel, while days high was touched at $4.3863. The grain fell by 0.5% on Tuesday, a third consecutive daily decline, and extended its weekly loss to 4%.

Meanwhile, soybeans for delivery in November slipped 0.09% to $12.6625 per bushel at 9:54 GMT and varied between days low of $12.6388, the weakest level since August 13, while days high was touched at $12.6925 per bushel. The oilseed plunged 1% on Tuesday after retreating almost 3% on Monday and extended its weekly decline to 4.1%.

Wheat futures for December settlement traded at $6.7938 a bushel at 9:56 GMT, down 0.27% on the day. The contract held in days range between $6.8263 and $6.7800 and extended its weekly decline to nearly 0.3%.

Grain futures continued to fall after Mondays bearish inventories report as the still unresolved federal government shutdown threatened to disrupt functioning of the U.S. Department of Agriculture. National Agricultural Statistics Service spokeswoman Sue King said that the agency wont issue reports including information over global supply and demand for commodities while employees are put on unpaid leave.

Vanessa Tan, an investment analyst at Phillip Futures Pte, said for Bloomberg: “Concerns regarding the shutdown of the U.S. government is mostly geared towards USDA going dark. If the USDA is unable to issue its reports and conduct inspections it could adversely affect overseas demand.”

The market remained under pressure following the release of USDAs inventories statistics on Monday. As of September 1, corn stockpiles stood at 824 million bushel, 25% higher than the agency’s estimate of 661 million on September 12. Analysts surveyed by Bloomberg anticipated a rise to 694 million bushels. The government agency said in its latest WASDE report that the nation will harvest a record 13.843 billion bushels of corn in 2013. Projections will be updated on October 11.

Data also showed that U.S. corn consumption and exports fell by 10% in the twelve months ended August 31 from a year earlier. According to a Bloomberg survey, total supplies after this month’s harvest will surge 24% to 14.537 billion bushels. The grain has fallen 37% this year and is the worst performer of the Standard & Poor’s GSCI Index of 24 commodities.

Meanwhile, soybeans supplies were 11% higher than previously estimated on September 12. Total stockpiles stood at 141 million bushels, well above previously calculated at 125 million. Analysts surveyed by Bloomberg last week expected a rise to 127 million. Demand in the three months ended August 31 fell by 41% to 294 million bushels compared to 2012. The USDA’s 2012 output estimate was increased by 18.6 million bushels. The government agency trimmed its crop estimate to 3.149 billion bushels this year on September 12.

Wheat stockpiles were 12% smaller than a year earlier at 1.86 billion bushels. Total U.S. production in the market year begun June 1 will also trail last years output at 2.13 billion bushels, down from 2.27 billion in 2012. Analysts surveyed by Bloomberg however expected supply to be smaller at 2.02 billion bushels.

DTN reported on October 1 that weekend rains in the Southern Plains continue to offer improved soil moisture for planting and early development of winter wheat.