Corn slumps to 40-month low on U.S. supply outlook

January 9, 2014 10:30 AM

Corn futures (CBOT:CH14) fell to a 40-month low on speculation that inventory will surge the most in 19 years in the U.S., the world’s biggest producer. Wheat dropped to the cheapest since 2011.

Stockpiles of corn on Dec. 1 probably jumped 34 percent to 10.764 billion bushels (273.4 million metric tons) from a year earlier, the biggest gain since 1994, according to a Bloomberg survey of analysts, Tomorrow, the U.S. Department of Agriculture makes its first estimate since the harvest ended.

Reserves are recovering after a drought in 2012 sent prices to an all-time high, sparking a surge in output from the U.S. to Brazil and Ukraine. Global inventories also are forecast to rise, a separate survey showed this week. Last year, corn futures in Chicago plunged a record 40 percent, leading a drop in commodities.

“U.S. corn stocks are more than adequate relative to usage,” Doug Bergman, a vice president of agricultural derivatives at RMC Asset Management in Chicago, said in a telephone interview. “The drop to new lows leaves few reasons for either speculators or grain users to step in a buy.”

Corn futures for March delivery in March declined 1.2 percent to close at $4.12 a bushel at 1:15 p.m. on the Chicago Board of Trade, the third straight drop. Earlier, the price touched $4.08, the lowest for a most-active contract since Aug. 11, 2010.

Wheat Slumps

Wheat futures for March delivery declined 0.8 percent to $5.8425 a bushel after touching $5.785, the lowest since Dec. 16, 2011. Global reserves will rise 3.9 percent to 182.68 million tons from a year earlier, the Bloomberg survey showed. The U.S. is the top exporter.

Yesterday, the Standard & Poor’s GSCI Index of eight agricultural raw materials touched the lowest since July 2010. The gauge has dropped 23 percent in the past 12 months.

“Grain markets were pressured by general weakness in the commodity complex and fears of a bearish set of projections in Friday’s USDA report,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said in a report.

Wheat production in India, the second-largest grower, will probably climb 8.1 percent to a record 100 million tons in the year starting on April 1 as high domestic prices boost planted acreage, Agriculture Commissioner J.S. Sandhu said today in an interview. China is the top producer.

Soybean futures for March delivery gained 0.4 percent to $12.7375 a bushel in Chicago.

Corn is the biggest U.S. crop, followed by soybeans, hay and wheat, government figures show.

About the Author