Corn futures tumbled the most in seven weeks on speculation that demand for the grain to make ethanol will decline in the U.S., the world’s top producer. Soybeans rose, while wheat declined.
The Environmental Protection Agency on Nov. 15 proposed a cut next year in the amount of renewable fuels that refiners must blend with gasoline to 15 billion to 15.52 billion gallons. That compares with 18.15 billion gallons set in 2007 legislation. Corn output will jump 30 percent to a record in 2013, the Department of Agriculture says.
“The EPA’s proposal has cast a negative shadow over the market,” Jim Gerlach, the president of A/C Trading Co. in Fowler, Indiana, said in a telephone interview. “People are concerned about the rising U.S. corn supply this year keeping downward pressure on prices into 2014.”
Corn futures for March delivery fell 2.2 percent to close at $4.21 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest drop for a most-active contract since Sept. 30. Trading was more than double the average in the past 100 days for this time, according to data compiled by Bloomberg. This year, the grain has plunged 40 percent, the most among 24 raw materials in the Standard & Poor’s GSCI Spot Index.
Earlier, the March price touched $4.205, the lowest since the contract started trading in December 2011.
The EPA proposal would cut the corn mandate to 4.777 billion bushels in 2014, Societe Generale said today in report. About 4.9 billion bushels will be used to make ethanol in the 12 months that began Sept. 1, the USDA said on Nov. 8. A final EPA rule is due in the first quarter after refiners and ethanol makers file comments with the agency.
“Any time a market makes new lows on rising volume, that is a bearish signal,” Gerlach said. “Corn could be headed for $3.50 next year, if South America weather continues to point to big crops.”
Soybean futures for January delivery rose 0.5 percent to $12.875 a bushel. Wheat futures for March delivery dropped 0.3 percent to $6.525 a bushel.