Soybeans fell the most in six weeks and corn tumbled after the Obama administration proposed cutting the quota for the amount of renewable fuels that must be used, reducing demand for the crops to produce ethanol and biodiesel.
The U.S. Environmental Protection Agency’s 2014 proposal today was 15 billion to 15.52 billion gallons, down from 18.15 billion gallons set in 2007 legislation. The specific amount probably will be set in the first quarter.
“This fight is far from over in the court system, but for today, the EPA plan was viewed as a negative development,” Jerrod Kitt, the research director for the Linn Group in Chicago, said in a telephone interview. “It definitely triggered selling in the corn and soybean markets.”
Soybean futures for January delivery slumped 2.5 percent to close at $12.805 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest drop for a most-active contract since Sept. 30. The oilseed fell 1.2 percent this week after reaching a seven-week high yesterday at $13.215.
Corn futures for March delivery fell 1.4 percent to $4.305 a bushel in Chicago. It was the biggest drop since Oct. 28 and pared this week’s gain to 0.9 percent
Prices also fell on speculation that planting progress and early crop development will improve in South America.
Mostly dry weather in the next 10 days in Argentina, the world’s biggest shipper of soy-based animal feed and cooking oil, will firm soils for accelerated sowing after some fields got as much as 10 inches (25 centimeters) of rain in the past 30 days, T-Storm Weather LLC in Chicago said in a report. Precipitation and seasonal temperatures will aid Brazil crops, the forecaster said.
“The weather pattern means the South American crops will get off to a very good start, improving the potential for record harvests,” Dax Wedemeyer, a market analyst at U.S. Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “There is nothing threatening, and that means little reason to hold long positions.”
Wheat futures for March delivery slid 0.1 percent to $6.545 a bushel, paring the weekly advance to 0.7 percent.