Corn fell for a fourth day in Chicago on speculation demand will slow after a drought-fueled surge in prices spurred U.S. lawmakers to propose reducing requirements for use of ethanol made from the grain.
More than 150 U.S. legislators asked President Barack Obama’s administration to cut a requirement that refiners use ethanol, added to gasoline. Ethanol producers used more than 40 percent of last year’s U.S. corn crop. Corn has surged 56 percent since mid-June as the U.S. suffered its worst drought since 1956, increasing costs for users including livestock producers and food processors.
“The market certainly did take some direction from that announcement” from legislators, said Michael Creed, an agribusiness economist at National Australia Bank Ltd. Predicting whether the government will give in to the calls is difficult, he said.
Corn for December delivery fell 0.6 percent to $7.9125 a bushel on the Chicago Board of Trade by 1:03 p.m. London time. Futures reached a record $8.205 on July 31 and are down 0.3 percent this week.
Fuel refiners are required to use 13.2 billion gallons of ethanol this year and 13.8 billion in 2013, according to standards from the Environmental Protection Agency, which regulates the renewable-fuels market. The EPA can adjust or waive the ethanol requirement if it would cause “severe harm to the economy or environment,” according to lawmakers led by Republican Representative Bob Goodlatte of Virginia.
Drought may persist in the Midwest and spread into areas of North Dakota and central Texas through October, the U.S. Climate Prediction Center said yesterday. The Department of Agriculture slashed its forecast for the U.S. corn crop by 12 percent on July 11 to 12.97 billion bushels. The USDA is scheduled to update its projections Aug. 10.
Soybeans for November delivery declined 0.3 percent to $16.1225 a bushel, for a weekly gain of 0.7 percent. The oilseed climbed to a record $16.915 on July 23.
The USDA said July 30 about 55 percent of the U.S. soybean crop was setting pods, a critical phase in determining yields. Areas of the Midwest may receive as much as 1.25 inches (3.2 centimeters) of rain in the next five days, according to a Commodity Weather Group forecast today.
“Weather over the last week and maybe this week may have helped conditions more” for soybeans than corn, which matures earlier, said Muktadir Ur Rahman, a commodities economist at Capital Economics Ltd. in London. “We don’t think we’ll see any upward yield improvement, but maybe yields are not deteriorating as sharply.”
Wheat for September delivery added 0.3 percent to $8.675 a bushel, set for a 3.4 percent loss this week. In Paris, November-delivery milling wheat fell 0.1 percent to 256.25 euros ($314.19) a metric ton on NYSE Liffe.