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May 10 (Bloomberg) -- Corn futures tumbled, heading for the biggest weekly loss in more than a month, after the government said U.S. inventories will double as farms recover from the drought in 2012 to produce the biggest crop ever.
The harvest this year will surge 31 percent from 2012 to 14.14 billion bushels (50.91 million metric tons), the U.S. Department of Agriculture said today in a report. The average estimate of 26 analysts surveyed by Bloomberg was 14.12 billion. Reserves on Aug. 31, 2014, will more than double from a year earlier to 2.004 billion bushels, the USDA said. Analysts in a Bloomberg survey expected 2.038 billion.
While planting is off to the slowest start since 1984 after rain and snow left muddy fields across the Midwest, farmers intended to sow the most acres since 1936. Corn futures have tumbled 26 percent from a record $8.49 a bushel in August, joining wheat and soybeans last month in a bear market that is reducing costs for buyers including hog-processor Smithfield Foods Inc. and ethanol makers such as Archer-Daniels-Midland Co.
"We have the potential to build a substantial buffer of corn supplies this year," Don Roose, the president of U.S. Commodities Inc. in West Des Moines, Iowa, said before the report. "The weather patterns remain volatile, and that means there is plenty of time for the crop to get bigger or smaller, depending on weather the rest of the growing season."
Corn futures for July delivery slumped 2.6 percent to $6.32 a bushel at 11:46 a.m. on the Chicago Board of Trade. A close at that price would leave the grain down 4.4 percent for the week, the biggest loss since April 5. Futures reached a 10-month low of $6.10 on April 24.
The expected jump in supplies will send prices lower, according the to government. Cash corn will average $4.70 a bushel in the year that starts Sept. 1, down from an estimated record $6.90 a year earlier. In 2011, the grain averaged $6.22.
Average yields this year may rise to 158 bushels an acre, a record, from 123.4 bushels in 2012, boosting output from an estimated 10.78 billion bushels last year, the USDA said. The government in February projected a crop of 14.53 billion, based on 96.5 million planted acres and an average yield of 163.6 bushels. The department lowered its estimate because of slow planting caused by cold, wet weather in the main U.S. growing regions, it said.
In each of the past three years, USDA forecasts for record crops proved wrong because of drought or heat, including a 13 percent decline in 2012 that was the largest slump in almost two decades. As of May 5, the government estimated 12 percent of the crop was in the ground, less than the 56 percent average of the prior five years.
Global corn production was forecast at a record 965.94 million metric tons, a 13 percent jump from the previous year, according to the USDA. Aggregated world inventories on Oct. 1, 2014, will total 154.63 million tons, up from 125.43 million forecast for the end of this marketing year, the USDA said. Reserves were projected to jump to 150.9 million tons, according to the average of 13 analysts surveyed by Bloomberg News.
Corn is the biggest U.S. crop, with a 2012 value of $77.4 billion, government figures show.
--With assistance from Alan Bjerga in Washington. Editors: Steve Stroth, Thomas Galatola
To contact the reporter on this story: Jeff Wilson in Chicago at [email protected]