* Corn falls daily 40-cent price limit * Wheat down most since Sept 2011; soy drops most in 6 mths * USDA pegs corn, soy stocks larger than analyst estimates (Updates U.S. market activity to close, adds analyst quotes) By Michael Hirtzer CHICAGO, March 28 (Reuters) - U.S. corn futures dropped more than 5 percent for their biggest daily loss since May on Thursday after a government crop report showed the stockpile of the grain larger than analysts expected.
Wheat futures fell the most in about 1-1/2 years and soybeans the most since September in the wake of the U.S.
Agriculture Department's annual plantings and quarterly stocks reports.
USDA surprised traders with forecasts for old-crop corn supplies, estimating the stockpile at the lowest in nine years, up from the average estimate of the lowest in 15 years.
The government also said farmers would plant the most corn acres since 1936 and the fourth largest soybean area ever.
"I don't think that corn acres are bearish... it's the stocks report the trade can't get around because it was so big," said Mike Zuzolo, analyst at Global Commodity Analytics.
Chicago Board of Trade corn futures for May delivery fell their daily 40-cent trading limit in the minutes following the report's release at midday, ending at $6.95-1/4 per bushel.
Corn settled at the lowest level in three weeks after prices notched a seven-week high on Thursday. Futures shed more than 3 percent in the month and ended the quarter roughly unchanged.
USDA pegged corn stocks as of March 1 at 5.399 billion bushels, above the average analyst estimate of 5.013 billion bushels. Soybean stocks were estimated at 999 million bushels, above trade guesses of 935 million bushels. "The corn stocks were off-the-charts bearish... stocks numbers undeniably bearish all around," said ABN Amro analyst Charlie Sernatinger.
CBOT May soybeans settled 49 cents, 3.4 percent, lower at $14.04-3/4. Soy lost 5 percent in March and about 1.3 percent in the first quarter of 2013.
The government estimated soy seedings at 77.126 million acres (31.2 million hectares), compared with average estimates of 78.394 million acres, which would have been the most ever.
USDA estimated corn plantings at 97.3 million acres, just above estimates of 97.252 million acres.
The government surveyed 83,500 farmers for the report, considered one of the most important crop forecasts of the year.
Growers were expected to increase overall seedings after the worst drought since 1934 last summer reduced yields and sent corn and soybean futures to a record last year. But the higher prices also reduced demand.
Corn use as animal feeding had its biggest quarterly drop ever on a percentage basis, according to CHS Hedging Inc analyst Tim Emslie. "We're obviously seeing the outcome of diminished demand.
The higher prices really did more damage to demand than people wanted to believe and that has left us with a higher stocks number," said Citigroup futures specialist Sterling Smith.
Plantings of all varieties of U.S. wheat were estimated at 56.4 million acres, up 1 percent from last year, while stocks of wheat were up 3 percent from a year ago.
Benchmark CBOT May wheat fell 6.7 percent, or 49 cents, to $6.87-3/4 per bushel. Wheat lost more than 2 percent in March and nearly 12 percent in the quarter for the second straight quarterly decline.
Prices at 2:38 p.m. CDT (1938 GMT) LAST NET PCT YTD CHG CHG CHG CBOT corn 695.25 -40.00 -5.4% 7.5% CBOT soy 1404.75 -49.00 -3.4% 17.2% CBOT meal 404.60 -18.50 -4.4% 30.8% CBOT soyoil 50.11 -0.71 -1.4% -3.8% CBOT wheat 687.75 -49.00 -6.7% 5.4% CBOT rice 1536.00 3.00 0.2% 5.2% EU wheat 238.50 -8.25 -3.3% 17.8% US crude 97.10 0.51 0.5% -1.8% Dow Jones 14,578 52 0.4% 19.3% Gold 1596.20 -8.53 -0.5% 2.1% Euro/dollar 1.2823 0.0043 0.3% -0.9% Dollar Index 82.9490 -0.2720 -0.3% 3.5% Baltic Freight 910 -12 -1.3% -47.6% (Additional reporting by Mark Weinraub and Julie Ingwersen in Chicago, Colin Packham in Sydney and Gus Trompez in Paris; Editing by Marguerita Choy and Sofina Mirza-Reid)