WASHINGTON (Reuters) - U.S. farmers planted slightly more corn and far more soybeans than they originally planned, the government said on Friday in a report that failed to ease concerns over a Midwest drought that has jeopardized a bumper harvest.
According to the Agriculture Department's annual planting report, it has been 75 years since growers seeded so many acres with corn. They also planted the third-largest amount of soybeans on record. The plantings were slightly larger than analysts had expected, but new-crop Chicago corn prices extended gains toward its biggest weekly rally since 2008.
"Weather trumps the report," said Don Roose, analyst with U.S. Commodities in West Des Moines, Iowa. "We traded the report for probably 30 seconds and then we went back to trading the weather. These are past numbers."
Ordinarily, large plantings would be a virtual guarantee of a mammoth crop. Bumper supplies were hoped for this year to replenish near record-low inventories and end a years-long cycle of food-price inflation and supply concerns.
But the crop is threatened by a searing drought stretching from the central U.S. Plains to the eastern Corn Belt, with little relief in sight as corn stalks enter the pollination stage, crucial for determining yield.
In a tacit recognition of the drought, USDA said 8 percent of corn land would not be harvested, the long-term norm but up 1 percentage point from a June 12 projection. A record corn crop is still within reach, but hot and dry weather already reduced the harvest by 1 billion bushels as analysts cut their yield forecasts by 4 percent since May.
Futures prices for corn rose on Friday at the Chicago Board of Trade with corn for July delivery up 1.5 percent at mid-morning. Soybeans futures rose 1.4 percent and wheat was up fractionally.
In what is normally one of the year's most important crop reports, the USDA said farmers planted 96.405 million acres of corn this spring, 5 percent more than last year and above an average trade estimate for 96.090 million. But it estimated that only 88.851 acres would be harvested, less than the 89.1 million it estimated in a June monthly report.
"Planted area is up in most states compared to last year due to expectations of better net returns in 2012 compared to other commodities," said USDA in referring to corn. It said the planted corn area set records in six states.
However some traders noted a worrying trend in the report. The USDA said farmers planted fewer acres than first expected in the highest-yielding states like Iowa and Nebraska, while planting more in South Dakota and Missouri, where productivity is typically lower. That could weigh on total production.
Soybean plantings rose 1 percent from last year to 76.080 million acres, more than 2 million acres, or 3 percent, more than USDA estimated in March thanks to a sharp rally in prices.
The larger acreage came partly at the expense of cotton, plantings of which are down 14 percent from last year.
USDA's projections of plantings were based on a survey of 70,000 growers. It said wheat plantings were up slightly from its March estimate, but sowings of durum and spring wheat were below expectations.
Quarterly stockpile data also released Friday morning held few surprises, unlike the past two years in which the USDA's June estimate of corn stocks has roiled markets, fueling criticism of its data and methods.
Corn inventories fell to 3.15 billion bushels in the three months to June 1, the smallest since 2004 for this time of the year. That was only 0.7 percent less than traders had expected. Soybean and wheat stocks were slightly bigger than forecast.
The corn stockpile has been expected to drop to the smallest in 16 years by the time the fall harvest begins, although traders said weakening demand could help ease the squeeze.
"We are already seeing ethanol plants shutting down, and export numbers have been poor for several weeks, said Shawn McCambridge, analyst at brokers Jefferies Bache. "We are already seeing indications of a slowdown."
Reporting By Charles Abbott; Editing by Tim Dobbyn and Alden Bentley