Corn prices fell sharply Wednesday after the U.S. government reported a surprisingly large increase in ethanol supplies.
The actively traded March contract for corn fell 9 cents, or 2.1%, to $4.17 a bu.
Besides higher ethanol supplies, which suggested that demand for ethanol could be weakening, traders are also worried that USDA could raise its production estimate and report higher corn stockpiles.
Wheat also fell sharply. The March contract lost 13.75 cents, or 2.3%, to $5.8875 a bu.
"This was a very tough day for corn and wheat," said Todd Hultman, a grain analyst with DTN/The Progressive Farmer in Omaha, Neb.
Hultman said the big concern for corn is that USDA will raise its estimate for last fall's crop to 14 billion bushels, compared with 10.8 billion bushels a year ago, when the crop was damaged by a severe drought. Traders also expect the level of corn stockpiles to increase 34 percent from a year ago.
"Corn has plenty of reasons to be bearish," Hultman said.
Corn had a terrible 2013 as signs emerged that the U.S. harvest would be huge. In the last 12 months, corn futures plunged 40 percent. They traded as high as $7.40 a bu. in January 2013.
In other agricultural contracts, March soybeans edged down 6.75 cents, or 0.5%, to $12.6925 a bu.