Corn Drops on Concern Rally Is Curbing Demand; Wheat Declines
Corn fell for a second day in Chicago on speculation a drought-fueled rally to a 13-month high may curb demand for supplies from the U.S., the world’s largest grower and exporter. Wheat also dropped.
U.S. output of ethanol, made from corn, fell 4.2 percent in the week ended July 6 to the lowest in almost two years, Energy Department data show. U.S. feedlots likely cut cattle purchases by 1.5 percent in June from a year earlier amid higher corn costs, according to a Bloomberg survey of analysts before a government report July 20. Corn has surged 51 percent since mid- June as Midwest crops withered under the drought.
“Demand is being rationed,” Arnaud Saulais, a broker at Starsupply Commodity Brokers, said by telephone today from Nyon, Switzerland. End users “are just buying day after day, week after week. They are not buying for the long term.”
Corn for December delivery fell 0.2 percent to $7.695 a bushel on the Chicago Board of Trade by 1:05 p.m. in London. The grain yesterday reached $7.89, the highest level for a most- active contract since June 9, 2011, and near the record $7.9925 set in 2008.
September-delivery wheat fell 0.8 percent to $8.7775 a bushel after yesterday reaching $8.985, the highest for a most- active contract since February 2011. Soybeans for November delivery lost 0.2 percent to $15.87 a bushel after yesterday touching $16.07, the most expensive since July 2008.
About 55 percent of the contiguous U.S. states were in moderate-to-extreme drought at the end of June, the highest percentage since December 1956, according to the National Climatic Data Center. Last month was the 14th-warmest ever and the 10th-driest June based on records going back to 1895.
Corn may climb to $9 a bushel if drought cuts U.S. yields to below 140 bushels an acre, unless there is a “demand meltdown,” UBS AG said today in a report. The U.S. Department of Agriculture cut its yield estimate to 146 bushels an acre on July 11 after projecting record 166-bushel yields in June.
Higher feed costs mean U.S. hog producers may lose about $20 a pig over the next three quarters, according to a report dated July 9 from Chris Hurt, an agricultural economist at Purdue University in West Lafayette, Indiana. In the U.K., hog farmers are losing about 18 pounds ($28) a head, according to the Agriculture and Horticulture Development Board’s pork unit.
In Paris, milling wheat for November delivery dropped 1.5 percent to 262.25 euros ($320.71) a metric ton on NYSE Liffe after yesterday touching 269 euros, the highest for a most- active contract since May 2011. Prices rallied as U.S. weather concerns were compounded by excess rains in the U.K. and northern France that threatened to erode the quality of crops.
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