U.S. soybean futures tumbled to their lowest level in more than six months on Friday after the government raised domestic production and inventory estimates more than expected in influential crop reports.
Corn futures soared to a three-week high and wheat rose to its highest level in more than a week on tighter-than-expected supply projections from the U.S. Department of Agriculture.
USDA, in the hotly anticipated reports, pegged the U.S. corn stockpile at 8.03 billion bushels as of Dec. 1, three per cent smaller than expected.
Inventories at the end of the crop's marketing year on Aug. 31 were estimated at a 17-year low of 602 million bushels, less than a three-week supply and almost 10 per cent smaller than expected.
"The stocks situation, it's the real deal in the corn," said Jason Britt, president of Central States Commodities. "It's tight."
Chicago Board of Trade (CBOT) March corn climbed 1.4 per cent to $7.08-3/4 a bushel, ending up 4.2 per cent for the week in its biggest weekly rise in more than five months.
March soybeans slid 0.5 per cent to $13.73-1/4 per bushel in its fourth consecutive day of losses, but eked out a gain of 0.4 per cent for the week. March wheat climbed 1.4 per cent to $7.54-3/4, up one per cent for the week.
Slim corn supplies were a "reality check" for traders, who drove corn to a six-month low on Monday due to sluggish export demand, Britt said.
USDA, in its report, acknowledged stiff competition for corn exports. However, strong domestic demand for the grain will drain supplies and "support continued strong and volatile prices well into summer," according to the department.
Corn prices have pulled back 15 per cent since reaching a record high in August as the worst U.S. drought in 56 years slashed harvests.
Bigger soybean harvest
USDA raised its estimate for the 2012 U.S. soybean harvest by 1.5 per cent from last month to 3.015 billion bushels, and its outlook for U.S. soy inventories at the end of the crop's marketing year on Aug. 31 by 3.8 per cent to 135 million bushels.
Estimated production has crept up since the savage drought sparked worries of major crop losses during the summer.
Soybean futures have retreated almost 24 per cent since reaching a record high in September.
Many traders expect U.S. soybean supplies to swell further in the coming months due to reduced export demand. The United States is facing increasing competition for business from Brazil, which is expected to harvest a record crop, and from Argentina.
Some traders doubted USDA's unchanged estimate for U.S. soybean exports of 1.345 billion bushels.
"Soybeans will deal with big competition from South America," said Don Roose, president of U.S. Commodities.
Competition for exports
Brazil will harvest a record 82.5 million tonnes of soybeans this spring due to record plantings and improving yield prospects, according to USDA.
With a mammoth crop, Brazil would surpass the U.S. as the world's No 1 soy grower and exporter for the first time.
USDA on Friday said private exporters had struck deals to sell 120,000 tonnes of U.S. soybeans to top importer China.
On Thursday, exporters reported 306,000 tonnes of U.S. and optional-origin soybeans to China for delivery this marketing year and next. On Wednesday, they reported 120,000 tonnes of optional-origin soybeans to China for 2013-14 delivery.
"Dismal" wheat prospects
Wheat futures jumped as USDA pegged U.S. inventories at the end of the crop's marketing year on May 31 at a four-year low of 716 million bushels. That was down five per cent from USDA's December estimate and 3.4 per cent smaller than expected.
The department estimated U.S. winter wheat seedings at 41.82 million acres, two per cent smaller than expected.
Farmers face "dismal prospects for a crop next spring and summer" due to the damaging drought and lower-than-expected plantings, said Brian Hoops, president of Midwest Market Solutions.
In its first disaster declaration of the new year, USDA earlier this week made growers in large portions of four major wheat-growing states -- Kansas, Colorado, Oklahoma and Texas -- eligible for low-interest emergency loans due to the drought.
-- Tom Polansek covers agriculture and the CBOT for Reuters from Chicago. Additional reporting for Reuters by Nigel Hunt in London, Naveen Thukral in Singapore and Gus Trompiz in Paris.