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Crop Prices Drop After Surging to Record on U.S. Drought

Crop Prices Drop After Surging to Record on U.S. Midwest Drought
The condition of the corn crop deteriorated for the sixth straight week, the longest such streak since 2003, as the drought spread, the USDA said last week. Photographer: Daniel Acker/Bloomberg

July 23 (Bloomberg) -- Corn fell from a record and soybeans declined on speculation slowing economic growth will curb demand for commodities.

Corn for December delivery fell 2.9 percent to $7.73 a bushel on the Chicago Board of Trade at 12:29 p.m. in Paris after rising to a record $8 a bushel. Soybeans fell 2.7 percent to $16.425 a bushel.

Corn has soared since mid-June as the worst U.S. drought in decades cut yields, signaling higher food prices and raising costs for producers of livestock feed and ethanol. The grain rally will resume, said Paul Deane, an agricultural economist at Australia & New Zealand Banking Group Ltd.

“What we’re seeing this morning is probably just a little bit of reaction to the macro-economic situation,” Deane said in a Bloomberg Television interview. “In the short term, there’s a little bit of susceptibility if we get a major macro-risk event,” after the rally lured investors.

Wheat for September delivery dropped 2.7 percent to $9.2925 a bushel, after climbing to $9.4725, the highest price for a most-active contract since August 2008. Milling wheat for November delivery traded on NYSE Liffe in Paris slipped 1.3 percent to 266.25 euros a metric ton.

Commodities Drop

Commodities as tracked by the Standard & Poor’s GSCI Spot Index fell today as oil, copper and gold dropped. German Vice Chancellor Philipp Roesler told broadcaster ARD yesterday that he is “very skeptical” Greece can be rescued and that the prospect of its exit from the monetary union “has long ago lost its terror.”

Corn is in the fourth year of a bull market, heading for the longest rally since 1964. The drought that prompted the U.S. to declare almost 1,300 counties in 29 states as natural-disaster areas may cause a global shortage, said Commonwealth Bank of Australia. Global production was estimated by the U.S. Department of Agriculture on July 11 to rise to a record 905.2 million tons in 2012-2013.

To contact the reporters on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net; Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net; Steve Stroth at sstroth@bloomberg.net

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