Corn drops as Brazil crop may add to glut

June 21 (Bloomberg) -- Corn fell in Chicago on concern a record harvest in Brazil’s Mato Grosso state may add to a supply glut and on speculation slowing U.S. economic growth will cut demand for grain used to make ethanol.

Mato Grosso’s second-season corn crop is expected to be “super-sized,” climbing to 13.1 million metric tons from 6.9 million tons in 2010-11, Soybean & Corn Advisor wrote June 19. World stockpiles are expected to reach the highest level in more than a decade in 2012-13 on a record crop in the U.S., the country’s Department of Agriculture estimates.

Brazil is expecting a record corn crop of its own this season,” Dave Norris, an independent grain trader from Harrogate, England, wrote in a market comment. “Theirs is on the market now, with local reports suggesting a really good second crop is on the cards.”

Corn for December delivery slid 1.5 percent to $5.58 a bushel on the Chicago Board of Trade by 12:50 p.m. in Paris. Prices jumped 12 percent, the most since April 2011, in the past three days.

Weaker growth in the U.S. has curbed demand for fuel. Crude oil reached an eight-month low today after the country’s stockpiles unexpectedly climbed to the highest in 22 years. About a third of the U.S. corn harvest is used to produce ethanol that’s blended into gasoline.

“The economic indicators remain disappointing, both in the U.S. as well as for China,” Paris-based farm adviser Agritel wrote in a market report. “This translates particularly in a continuation of the decline in oil prices.”

U.S. ethanol inventories had a 2.5 percent weekly gain in the week to June 15, according to the Energy Department.

Wheat for September delivery declined 0.9 percent to $6.77 a bushel after a three-day, 9 percent climb. November-delivery milling wheat traded on NYSE Liffe in the French capital slipped 0.4 percent to 211.75 euros ($268.31) a ton.

November-delivery soybeans lost 0.9 percent to $13.825 a bushel in Chicago. The oilseed advanced 6.6 percent in the past four sessions.

Bloomberg News

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