USDA Supply Shockers a Dilemma for Corn Market

As Futures Plunge, What to Expect in June?

The Agriculture Department's quarterly estimates of U.S. corn inventories have become a source of substantial surprises for the grain market, including an unexpectedly high number in last week's update that sent Chicago corn futures tumbling to the lowest levels in nine months.

Dating from March 2010, 11 of the past 13 quarterly stocks estimates have deviated from expectations by enough to generate large price movements, according to University of Illinois economist Darrel Good. During that period, USDA stock estimates have been both much larger and much smaller than generally expected.

"The recent pattern of large and seemingly alternating direction of the surprises in the quarterly corn stocks estimates is problematic," Good wrote earlier this week onfarmdocDaily. "The dilemma now... is what to expect for the June 1 stocks estimate."

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