Corn Futures for March Fall to Lowest Ever; Soy, Wheat Advance

November 18, 2013 05:36 AM

Corn prices drop on speculation that demand for the grain to make ethanol will decline in the U.S., the world’s top producer.

Nov. 18 (Bloomberg) -- Corn futures for March delivery fell to the lowest ever on speculation that demand for the grain to make ethanol will decline in the U.S., the world’s top producer. Soybeans and wheat rose.

The Environmental Protection Agency on Nov. 15 proposed a cut next year in the amount of renewable fuels that refiners must blend with gasoline to 15 billion to 15.52 billion gallons. That compares with 18.15 billion gallons set in 2007 legislation. Corn output will jump 30 percent to a record in 2013, the Department of Agriculture says.

"The EPA’s proposal has cast a negative shadow over the market," Jim Gerlach, the president of A/C Trading Co. in Fowler, Indiana, said in a telephone interview. "People are concerned about the rising U.S. corn supply this year keeping downward pressure on prices into 2014."

Corn fell 0.6 percent to $4.2775 a bushel at 10:17 a.m. on the Chicago Board of Trade. Earlier, the price touched $4.255, the lowest since the contract started trading in December 2011.

Through Nov. 15, the grain tumbled 38 percent this year, based on the contract with the highest open interest. Aggregate trading was double the average in the past 100 days for this time, according to data compiled by Bloomberg.

The EPA proposal would cut the corn mandate to 4.777 billion bushels in 2014, Societe Generale said today in report. About 4.9 billion bushels will be used to make ethanol in the 12 months that began Sept. 1, the USDA said on Nov. 8. A final EPA rule is due in the first quarter after refiners and ethanol makers file comments with the agency.

"Any time a market makes new lows on rising volume, that is a bearish signal," Gerlach said. "Corn could be headed for $3.50 next year, if South America weather continues to point to big crops."

Soybean futures for January delivery rose 0.6 percent to $12.8875 a bushel.

Wheat futures for March delivery gained 0.2 percent to $6.5575 a bushel.

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