(Reuters) – Chicago corn lost more ground on Thursday, falling for a third consecutive session as the harvest of a record-large crop in the United States boosts global supplies.
U.S. soybean futures also eased, dropping for the first time in seven sessions after Chinese demand pushed the market to its highest in six weeks.
“Global corn inventories are increasing to very comfortable levels after being drastically tight over the past 12 months,” said Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia.
Corn was also being affected by concerns over a possible reduction in the U.S. government’s 2014 quota of corn-based ethanol fuel used in gasoline.
The U.S. Environmental Protection Agency could soon revise its Renewable Fuel Standard, or RFS, by lowering the amount of corn-based ethanol required in 2014 for blending into gasoline.
Documents leaked earlier this year indicated the government might lower its corn-based ethanol requirement to 13 billion gallons, versus the 14.4 billion called for in the 2007 RFS law.
“If that were to occur than it is going to provide a more subdued environment for U.S. corn demand which will flow through to the oilseed complex and wheat complex,” said Williams.
Chicago Board Of Trade front-month corn fell 0.1 percent to $4.29-1/4 a bushel by 0237 GMT, after closing down 0.5 percent on Wednesday. January soybeans lost 0.5 percent to $13.08-1/2 a bushel.
Crop forecaster Lanworth on Wednesday slightly raised its forecast for the 2013/14 U.S. corn crop and trimmed its outlook for U.S. soybean production. Lanworth said it expected a U.S. corn crop of 13.944 billion bushels, compared to its outlook of 13.938 billion bushels issued a week ago.
For the U.S. soybean crop, Lanworth lowered its outlook to 3.287 billion bushels from 3.293 billion due to the USDA’s 900,000 acre cut to soybean plantings in “minor production states”.
The soybean market, which climbed to a six-week top of $13.19-3/4 a bushel on Tuesday, is also facing pressure from rising supplies.
“The story around the bean market is of strong demand but at the same time production prospects look very good globally and we are not likely to see shortage of beans,” said Mathews.
Commodity funds sold a net 5,000 CBOT corn contracts on Wednesday, trade sources said. They were even in wheat and bought 2,000 soybean.
