Corn, Soybeans Fall as USDA Sees Reduced Use, Higher Stockpiles

March 11 (Bloomberg) -- Corn fell for the first time in four sessions and soybeans declined after the U.S. government cut its global demand forecasts and raised inventory projections.

World corn reserves before this year’s harvest in the Northern Hemisphere will reach 144.62 million metric tons, up 5.8 percent from a February estimate and higher than 129.96 million tons a year earlier, the Department of Agriculture said in a report. Global soybean inventories on Sept. 30 will be 49.95 million tons, up from 49.87 million forecast in February as consumption falls 1.7 percent, the USDA said.

“The report indicated world demand is going to be anemic this year,” leading to more supplies than analysts expected, said Don Roose, president of U.S. Commodities Inc. in West Des Moines, Iowa. “It’s a very fragile world economy.”

Corn futures for May delivery fell 11 cents, or 2.9 percent, to $3.645 a bushel on the Chicago Board of Trade, the steepest decline for a most-active contract since Feb. 27. The price had gained 4.7 percent in the previous three sessions. Before today, futures had dropped 53 percent since reaching a record $7.9925 on June 27.

Soybean futures for May delivery fell 15 cents, or 1.7 percent, to $8.62 a bushel in Chicago, after earlier rising 1.4 percent. Before today, the most-active contract had dropped 46 percent from a record $16.3675 in July, touching an 11-week low of $8.3825 on March 2.

Demand for grain and oilseeds to feed livestock, poultry and dairy cows will fall as the global recession reduces consumer demand, said Gregg Hunt, a market analyst for Fox Investments in Chicago.

Falling Feed Demand

World consumption of grain to feed animals, excluding rice and wheat, will fall 1.7 percent to 642.5 million metric tons in the marketing year that began Oct. 1, the USDA said. That would be the biggest percentage drop in 13 years, USDA data show.

Global consumption of soybeans to make animal feed and vegetable oil will fall 3.1 percent to 195.3 million tons, the first drop in five years, the USDA said.

Demand from U.S. wheat millers to produce flour will fall 2.6 percent to 925 million bushels in the marketing year that ends May 31, the lowest in three years, the government said.

“When consumers are cutting back on eating bread, they certainly are not going to rush out and buy a T-bone steak or a rack of ribs,” Hunt said. “Falling demand is the main concern.”

Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, with soybeans in second place at $27.4 million, government figures show. The U.S. is the world’s biggest corn and soybean grower and exporter.