Corn futures fell from a 23-month high on bets that this quarter’s rally will erode demand for feed by U.S. livestock and poultry producers.
Before today, corn surged 37 percent in the third quarter on concern that adverse weather slashed U.S. yields. U.S. supplies inspected for export fell 34 percent to 28.5 million bushels in the week ended Sept. 16 from a week earlier, the U.S. Department of agriculture said today. Cattle futures fell from a two-year high.
“As a banker, we would rather have livestock producers floating than locking in feed costs and guaranteeing a production loss,” said Michael Swanson, a senior agricultural economist at Minneapolis-based Wells Fargo & Co., the largest U.S. farm lender. Livestock, dairy and broiler producers “are all running on razor’s edge after the rally in prices,” he said.
Corn futures for December delivery fell 5 cents, or 1 percent, to close at $5.0825 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price reached $5.2375, the highest level for a most-active contract since Sept. 30, 2008.
Prices also fell on speculation that yields will improve as the harvest progresses, said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC in Chicago.
The crop will total 13.16 billion bushels, down from 13.365 billion forecast in August, the government said on Sept. 10. An estimated 11 percent was harvested as of Sept. 12, up from the average of 6 percent at the same time in the previous five seasons, the USDA said last week.
“We can see some better yields as the harvest moves north because it was cooler and many fields received regular rains in August,” McCambridge said.
The drop in futures today snapped a seven-session rally, the longest advance since June 2008.
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, government figures show.