(Businessweek) – Corn fell to the lowest in four years as rising production from the U.S. to Europe is expected to boost global supplies, pushing aside concerns that turmoil in Ukraine may disrupt shipments from the Black Sea region.
U.S. corn and soybean conditions were expected to remain favorable this week, with cool weather beneficial for the pollinating corn crop across the Midwest, MDA Weather Services wrote in a July 18 note. The European Union’s crop-monitoring unit raised its outlook for corn yields today, citing advantageous conditions for summer crops.
Corn for December delivery fell 1.6 percent to $3.725 a bushel on the Chicago Board of Trade by 6:15 a.m. after earlier touching $3.72, the lowest for a most-active contract since July 14, 2010. Prices are set for a third monthly decline.
“The growing season continues in nearly perfect form here in the U.S. and in much of Canada,” economist Dennis Gartman wrote in his newsletter. “This relentless bear market shall not end until the nation’s farmers have sold their crops.”
Futures fell 25 percent in the past year on expectations a second straight bumper crop in the U.S. will lift world supplies. The U.S. Department of Agriculture predicts domestic output will reach 13.86 billion bushels, the second-highest on record.
“Conditions are perfect for yields to be above trend,” Paul Deane, an analyst at Australia & New Zealand Banking Group Ltd., said by phone. “Below-average temperatures, good rains, the market is really looking at that now.”
The U.S. corn yield is forecast to be 171 bushels per acre, the highest ever, Commodity Weather Group wrote in a July 17 report, citing analysis of crop conditions, vegetative health as well as rainfall and temperature patterns.
Harvest Start
World corn inventories will be 188.05 million metric tons before the start of the 2015 harvest, up from 173.42 million estimated for this year and the highest since 2000, the USDA said on July 11.
EU average corn yields are forecast to climb to 7.23 tons per hectare (2.47 acres) from 6.72 tons in 2013, according to the bloc’s crop-monitoring unit MARS. The outlook was raised from 7.18 tons per hectare after July rainfall boosted soil moisture for summer crops, the unit wrote in a report today.
Wheat for September delivery fell 0.9 percent to $5.2725 a bushel. The grain fell to $5.2425 in Chicago on July 14, the lowest since July 2010. Milling wheat fell 1.7 percent to 176.25 euros ($238.29) a metric ton on Euronext in Paris after earlier touching 176 euros, a lifetime low for the contract.
Chicago wheat prices jumped 2.4 percent on July 17 after the downing of a Malaysian Airlines passenger jet near Ukraine’s border with Russia spurred concern that escalating tensions may disrupt supply. Russia and Ukraine account for about 17 percent of global wheat exports and Ukraine was the third-biggest corn shipper in 2013-2014, USDA data show.
Soybeans for delivery in November dropped 1.3 percent to $10.7075 a bushel in Chicago.
