Corn Futures Enter Bear Market on Rising U.S. Stockpiles

Corn futures entered a bear market on the outlook for larger stockpiles and improved growing conditions in the U.S., the world’s largest producer and exporter.

Domestic stockpiles reached 3.85 billion bushels at the start of June, the U.S. Department of Agriculture said this week. That topped the average estimate of 3.72 billion in a Bloomberg survey of 26 analysts. Light showers and moderate temperatures in the Midwest are aiding corn pollination, according to World Weather Inc.

U.S. corn production that rose to a record last year is poised to top the high this season, adding to the outlook for a global glut. Stockpiles of soybeans and wheat are also climbing, helping to keep food costs in check, with the United Nations saying world food prices fell in June for the third straight month.

“This is follow-through selling given the much larger-than-anticipated stocks that we saw in corn,” Terry Reilly, senior commodity analyst at Futures International LLC in Chicago, said in a telephone interview. “More importantly is the nearly ideal weather outlook we’re looking at in the U.S. Midwest. Temperatures are a little bit on the cooler side over the next week or so, which promotes crop development.”

Corn futures for December delivery fell 0.7 percent to close at $4.1525 a bushel on the Chicago Board of Trade. That leaves prices down 20 percent from this year’s settlement high of $5.215 in April, meeting the common definition of a bear market.

Goldman Forecast

Futures will fall to $4 in six months, Goldman Sachs Group Inc. said in a June 23 report. Weather during the next week will favor crops, with scattered showers over parts of the Corn Belt, said Joel Widenor, a meteorologist at Bethesda, Maryland-based Commodity Weather Group.

An index of 55 food items fell 1.8 percent to 206 from a restated 209.8 in May, the Rome-based United Nations agency said today. World food prices were 2.8 percent lower than a year earlier.

Global grain stockpiles, excluding rice, are forecast to climb to a 15-year high by the end of the 2014-2015 season, the London-based International Grains Council said on June 26.

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