High yields leave US farmers with 80 per cent crop unsold, piles lure bearish bets

Piles of unwanted grain on farms near Doug Schmitz’s storage bins in southern Minnesota are a stark reminder of just how bearish the outlook is for US crop prices.

After record yields during the harvest a few months ago, growers in the area still have 80 per cent of their corn crop left to sell and 70 per cent of soybeans, said Schmitz, who operates four grain elevators and markets to processors and exporters. Normally, half the supply would be unloaded by now, he said.

While Schmitz Grain Inc. is under contract to collect 2 million bushels from local farmers, the outlook is so dim that most of that inventory hasn’t been priced yet, he said. Money managers are holding their most-bearish bets on grain prices since the government started tracking the data in 2006. It’s easy to see why. Stockpiles of corn and soybeans in the US, the world’s largest grower, probably were the biggest ever on Dec 1, and wheat inventories were the highest in five years, according to a Bloomberg survey of analysts. The government will issue its estimate Tuesday. "It’s the slowest sales pace in the 25 years I’ve been in the grain business," said Schmitz, who’s based in Currie, Minnesota.




"It’s amazing how well farmers were able to put away those bushels and wait for a recovery in prices that has failed to come."

Hedge funds held a combined netshort position of 337,678 futures and options in corn, soybeans and wheat as of Jan 5, 19 per cent more than the previous week and more than twice what it was a month ago, according to Commodity Futures Trading Commission data released three days later