Corn Futures Fluctuated on CBOT

Corn futures fluctuated by the maximum allowed on the Chicago Board of Trade after six of the past seven quarterly reports, with an average swing of 5.8 percent. Stockpiles (UGRSCNTO) are getting harder to predict as growers build more silos on their land rather than sending it to commercial grain elevators, making it more difficult to measure.

“Analysts’ errors have swung from too low to too high with increasing amplitude,” said William Tierney, the chief economist for Chicago-based research company AgResource Co. and a former USDA analyst. “The industry has to do a better job.”

Stockpiles probably totaled 6.16 billion bushels as of March 1, 5.6 percent lower than a year earlier, according to the average of 26 analysts surveyed by Bloomberg last week. The 6.5 percent plunge in the average U.S. cash price after the Jan. 12 report erased $3.73 billion from the value of stockpiles, data compiled by Bloomberg shows.

Corn futures have dropped 4.8 percent from a six-month high of $6.7575 a bushel on March 19, erasing this year’s gain. The grain last traded at $6.4325 and Societe Generale said in a March 19 report that prices may reach $7 in the second quarter.

The Standard & Poor’s GSCI Spot Index of 24 commodities rose 9.2 percent since the end of December as the MSCI All- Country World Index of equities gained 12 percent. Treasuries lost 1.4 percent, a Bank of America Corp. index shows. Food costs tracked by the United Nations rose for a second month in February and are within 9.5 percent of the record reached a year ago.

U.S. farmers, the world’s biggest agricultural exporters, reported record cash income of $108.7 billion last year, according to the USDA. They used some of that to build more storage, taking on-farm capacity to 12.78 billion bushels as of Dec. 1, the most since 1989, government data show. The 11 percent expansion since 2006 compares with a 15 percent advance in commercial storage to 10.11 billion bushels.

Adding grain bins gives growers more control over when they sell crops, and that pricing power is increasing after global output fell short of demand in eight of the past 12 years, said Dale Durchholz, the senior market analyst at AgriVisor LLC in Bloomington, Illinois.

Unusually wet and cold weather reduced the quality and weight of the crop in 2009, he said. Hot and dry weather in the past two years reduced yields while increasing the weight, he said. Farmers get paid for a 56-pound bushel of corn. The quarterly grain stocks estimates are based on surveys of producers and commercial grain companies.

“Estimating on-farm inventories is a problem because of the differences in the quality of the crops the past three years,” Durchholz said. “When the government asked farmers how much grain they have in storage, they don’t know the correct answer because of the variable weight of the crop.”