Corn Prices Are Tumbling in World's Top Exporters on Supply View

June 21, 2016 11:34 AM
Corn Prices Are Tumbling in World's Top Exporters on Supply View

Corn futures in Chicago are heading for the biggest two-day drop since August and prices are slumping in Sao Paulo state as the supply outlook improves in the U.S. and Brazil, the world’s top exporters.

U.S. rains through June 26 are seen aiding about half the crop in the Midwest and will bring a cooler temperature pattern into mid-July, according to Joel Widenor, director of agricultural services at Commodity Weather Group LLC in Bethesda, Maryland. In Brazil, harvesting of the country’s winter crop is picking up pace and helping to ease a supply squeeze.

“The weather patterns are taking out some of the heat, and we’re also adding a little bit of moisture” in the U.S., Ryan Kelbrants, a market analyst at CHS Hedging LLC in Inver Grove Heights, Minnesota, said in a telephone interview. “Our crop scouts are reporting excellent conditions.”

Corn futures for September delivery on the Chicago Board of Trade fell 4.7 percent to $4.0675 a bushel at 11:08 a.m. local time. Prices for rolling most-active future are down 8.1 percent in two days, the biggest such drop since Aug. 12.

Crop Ratings

September futures climbed in each of the past six weeks, the longest streak for the contract since it started trading in December 2013. A hot start to the U.S. growing season had raised concerns that plants would be under stress during the summer. Three-quarters of the U.S. crop, which is nearing its key pollination phase, was rated in good or excellent condition as of June 19, higher than the same time last year, government data showed Monday.

Wholesale spot-prices for corn in Campinas, Sao Paulo, dropped to 48.40 reais per bag ($6 bushel) on Monday, down 10 percent from a record high on June 2 and the lowest since April 25. The grain climbed earlier this month as dry weather hurt plants and rising exports sparked a shortage for Brazil’s domestic consumers. As crop collection progresses, the domestic supply squeeze is easing and buyers are trying to negotiate lower prices, according to Cepea, the University of Sao Paulo’s research arm.

In Mato Grosso, Brazil’s corn top producer, gathering is happening at a faster pace compared with previous seasons, according to Imea, the state’s Rural Economy Institute. About 10 percent of the total winter-crop area was harvested as of Friday, the group in a report. That was up from 5 percent a week earlier. Domestic prices are still profitable for producers, and farmers will take advantage of selling opportunities in coming weeks, Imea said.

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