Corn slipped from a 13-month high on speculation that a drought-fueled rally this month will curb demand for supplies from the U.S., the world’s largest grower and exporter. Soybeans closed unchanged after reaching a four- year high.
Ethanol output in the U.S. fell 4.2 percent in the week ended July 6 to the lowest in almost two years, government data show. The U.S. Department of Agriculture on July 11 cut its 2012 forecast for meat and poultry output by 0.7 percent. Corn futures are up 52 percent since mid-June as Midwest crops withered under the worst U.S. drought since 1956.
“We have reached levels that have historically slowed demand,” Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago, said in a telephone interview. “Anyone making ethanol or raising livestock is losing money at current prices. That’s called demand destruction.”
Corn futures for December delivery dropped 0.2 percent to close at $7.7125 a bushel at 2 p.m. on the Chicago Board of Trade, after reaching $7.89, the highest for a most-active contract since June 9, 2011. Prices are up 22 percent this month, more than any of the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index.
Soybean futures for November delivery closed unchanged at $15.905 a bushel on the CBOT, after touching $16.07, the highest since July 2008. Prices are up 21 percent since mid-June.
About 55 percent of the contiguous U.S. states were in moderate to extreme drought at the end of June, the highest percentage since December 1956, according to the National Climatic Data Center. Last month was the 14th-warmest ever and the 10th-driest June based on records going back to 1895.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.
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