Corn futures fell to a 16-week low on speculation that demand for U.S. exports will ebb after China put curbs on purchases of a feed ingredient made from the grain.
China’s quarantine agency suspended issuing permits to import U.S. dried distillers’ grains known as DDGS, because the government deems the product as having a high risk of containing MIR 162, a non-approved genetically modified strain of corn, according to three trading executives whose applications were denied. Futures dropped in the past four straight weeks amid concern that supplies would overwhelm demand.
“China is a factor,” Greg Grow, the director of agribusiness at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The lack of ability to export corn to them” and further delays of the approval of the MIR 162 strain “is certainly not a bullish item,” he said.
Corn futures for July delivery dropped 1.7 percent to close at $4.51 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest decline for a most-active contract since May 15. The grain earlier touched $4.455, the lowest since Feb. 14.
China is the largest buyer of DDGS, a livestock feed that is produced when corn is stripped of starch when making ethanol. While U.S. grain shipments to China plunged amid restrictions on the MIR 162 variety, imports of DDGS continued to rise because some port officials had been lenient, said Sylvia Shi, an analyst at Shanghai JC Intelligence Co.
In the season that ended last year, China was the third-biggest importer of U.S. corn, trailing Japan and Mexico, U.S. Department of Agriculture data show.
The U.S. Corn Belt is forecast to get sufficient moisture in the next two weeks with “no lasting heat or drying,” helping maintain “excellent growing conditions” for most areas, QT Weather in Chicago said.
Wheat futures for July delivery fell 0.9 percent to $6.125 a bushel.
Soybean futures for November delivery gained 0.5 percent to $12.2425 a bushel.