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Corn Extends Drop to Five-Year Low as U.S. Supply Tops Estimates

11:53AM Oct 01, 2014

Corn slumped to the lowest in five years after a U.S. government report showed domestic inventories before the start of this year’s record harvest were bigger than analysts predicted.

U.S. corn stocks were 1.236 billion bushels on Sept. 1, the U.S. Department of Agriculture reported yesterday, more than the agency’s Sept. 11 estimate of 1.181 billion and the 1.191 billion expected on average by analysts in a Bloomberg News survey.

The report "showed higher than expected numbers for wheat and corn," Paris-based farm adviser Agritel wrote in a market comment today. "It’s a USDA report that confirms a burdensome situation for all products."

Corn for December delivery lost 0.5 percent to $3.19 a bushel on the Chicago Board of Trade by 5.24 a.m. after earlier dropping to $3.185, the lowest for a most-active contract since September 2009. Prices fell for a fifth month in September and slumped 25 percent last quarter, the biggest such loss since the three months through June 2013.

"Domestic stockpiles were much higher than expected," Australia & New Zealand Banking Group Ltd. said in a note today. U.S. corn production is set to reach an all-time high of 14.395 billion bushels this year, the USDA estimates.

Bigger-than-estimated U.S. corn yields and inventories may further pressure prices, according to Goldman Sachs Group Inc. The bank forecasts prices at $3 a bushel in three months and six months, it said in a report dated yesterday. The last time corn traded at that level was in October 2006.

Soybeans for November delivery dropped 0.6 percent to $9.0775 a bushel. Prices fell to $9.055 on Sept. 29, the lowest since July 2010.

Wheat for delivery in December declined 0.8 percent to $4.74 a bushel in Chicago, while milling wheat traded in Paris added 0.2 percent to 153 euros ($192.98) a metric ton.

"Grain prices have tumbled as the U.S. dollar rallied to multi-year peaks against a basket of other currencies, making U.S. supplies less competitive in global markets," AWB, a unit of Cargill Australia Ltd., wrote in a note today.