By Tony C. Dreibus and Jeff Wilson, Copyright 2013 Bloomberg.
Corn futures headed for the longest slump in 32 years on speculation that beneficial weather will boost crops in Argentina, the world’s second-biggest exporter, and Brazil.
As much as 0.75 inch (1.9 centimeters) of rain fell in Argentina overnight, and an additional 1.75 inches are expected starting Feb. 17, easing stress from dry conditions this year, Commodity Weather Group LLC in Bethesda, Maryland, said in a report. Precipitation will boost crops in southern Brazil in the next two weeks, and drier weather in northern areas will aid harvesting, the company said.
Corn prices were poised for the ninth straight decline, the longest slide since December 1980. The U.S. Department of Agriculture said on Feb. 8 that global reserves as of Oct. 1 will be 118.04 million metric tons, up from 115.99 million predicted last month and surprising analysts who forecast a decline. Combined output in Argentina and Brazil will increase 5.9 percent this year.
"South America, for the most part, has a good-sized crop in the bag," Jason Britt, the president of brokerage Central States Commodities Inc. in Kansas City, Missouri, said in a telephone interview. "Argentina is still up for debate, but it’s stabilizing."
Corn futures for March delivery dropped 0.5 percent to $6.9275 a bushel at 12:20 P.m. on the Chicago Board of Trade. Volume at this time was 72 percent more than the average in the past 100 days.
Through yesterday, the grain tumbled 17 percent from a record settlement of $8.3875 on Aug. 21. The all-time high intraday price was $8.49 on Aug. 10 following a drought that cut U.S. production.
Larger inventories may reduce livestock-feed costs for pork producer Smithfield Foods Inc. and poultry processor Sanderson Farms Inc. Grain-based ethanol production has declined in the U.S., and plants are closing.
In the four months ended Jan. 31, exports from the U.S., the top shipper, have tumbled 55 percent to 8.12 million tons from a year earlier, USDA data show.