Corn declined to a three-year low as drier weather was set to boost a record harvest in the U.S., the largest producer, and as demand for the crop for ethanol may shrink if the government scales back the biofuel mandate.
The U.S. harvest will jump 28 percent this year after recovery from drought, according to the U.S. Department of Agriculture. The Environmental Protection Agency is considering a cut in the mandate on the use of corn-based ethanol in 2014, according to an internal proposal provided to Bloomberg News. The agency would call for the use of 13 billion gallons, down from 13.8 billion gallons this year, according to the proposal.
A reduction in the mandate will be "negative" for corn, Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said by phone today. The harvest progress is also pressuring prices, he said.
Corn for delivery in December dropped as much as 1.2 percent to $4.33 a bushel on the Chicago Board of Trade, the lowest level for futures since August 2010. Corn was at $4.34 by 10:51 a.m. London time, set for a second week of declines and heading for a 38 percent plunge this year. Futures trading volumes were 7 percent lower than the average for the past 100 days, according to data compiled by Bloomberg News.
Rain in the Midwest over the next 11 to 15 days will be limited, which should allow most areas to push the corn and soybean harvests ahead at a "favorable" pace, Commodity Weather Group said in a report yesterday. The crop will increase to 13.84 billion bushels this year from 10.78 billion bushels last year, the USDA says.
Wheat for December delivery dropped 0.3 percent to $6.8375 a bushel. Wheat for November delivery fell 0.6 percent to 197.50 euros ($268) a ton on NYSE Liffe in Paris. Soybeans for November delivery declined 0.4 percent to $12.8275 a bushel.