Chicago corn prices experienced their biggest two-day drop on record, tumbling 12.6 percent, or 93 cents, as larger-than-expected U.S. stockpiles weighed on the market, causing hedge funds to sell heavily.
Soybeans tumbled to a four-month low and wheat fell the most in a month after the U.S. raised its estimates for crop inventory including corn, easing concern over tight supplies following the worst drought since 1956.
Soybean futures for January delivery fell 3 percent to close at $14.5125 a bushel at 2 p.m. on the Chicago Board of Trade. Earlier, the oilseed touched $14.49, the lowest for a most-active contract since July 3. On Sept. 4, the price rose to a record $17.89.
Wheat futures for December delivery dropped 1.7 percent to $8.865 a bushel, the biggest decline since Oct. 12. The price has surged 36 percent this year. On July 23, the grain reached $9.4725, the highest since August 2008.
Corn production is forecast at 10.7 billion bushels, down slightly from the September forecast and down 13 percent from 2011. This represents the lowest production in the United States since 2006. Based on conditions as of October 1, yields are expected to average 122.0 bushels per acre, down 0.8 bushel from the September forecast and 25.2 bushels below the 2011 average. If realized, this will be the lowest average yield since 1995. Area harvested for grain is forecast at 87.7 million acres, up less than 1 percent from the September forecast and up 4 percent from 2011. Acreage updates were made in several States based on administrative data.
Corn, wheat and soybeans prices might have peaked after this summer drought in the US according to Macquarie Agricultural Funds Management, and it would take worsening weather elsewhere to push up futures.
Corn is still up 16 percent this year at $7.505 but has tumbled 12 percent from a record $8.49 a bushel on the Chicago Board of Trade and soybeans have jumped 34 percent to $16.24 but are now down 9.2 percent from a high of $17.89 a bushel.
The Russian government has decided to increase customs duties on soybeans, APK Inform reported. Currently set at 5%, with a minimum of 8.5 euros per tonne, they are raised from August 23rd to 20% with a minimum of 35 euros per tonne.
U.S. corn and soybean crops, the world’s largest, are in the worst condition since the last major drought in America’s breadbasket in 1988, the government said on Monday, pushing up grain prices and raising the prospect of global food-price inflation.
Corn and soybean prices soared at the Chicago Board of Trade, based on forecasts that thirsty crops will get no relief for at least another week, although a record-shattering heatwave abated over the weekend in the eastern half of the country.
One month after the southwestern province of Buenos Aires, the heart of the Argentine agricultural power, has been under water, Argentina is now facing a drought, leading analysts to revise soybeans production forecast down.
The Ministry of Agriculture estimates the soybeans production at 42.9 million tons this year, but professionals from Bolsa de Comercio de Rosario, the Rosario Board of Trade, and the first international port for soybeans, are more pessimistic. They expect around 40.5 million tonnes, against 52 to 53 million tons forecasted in spring.
The crop conditions for corn and soybeans have deteriorated further in the U.S., according to data published by the U.S. Department of Agriculture on June 18th. Only 63% of corn harvest is evaluated as “good” to “excellent”, against 66% a week earlier and 70% last year. For soybeans, these figures rise to 56%, against 60% last week and 68% in 2011.
These evaluations suggest lower yields than the previous forecast, which expected a U.S. corn production of 375.7 million tonnes and 87.2 million tonnes of soybeans for 2012-2013. Crops, especially in the Midwest, are affected by dry weather.
Some 700,000 hectares are under water in the southwestern province of Buenos Aires, the heart of the Argentine agricultural power, threatening the soybean crops and about 500,000 heads of livestock, local producers said yesterday.
Soybeans, of which Argentina is the third largest producer, was already hit by drought and production should decrease by 18.5% from about 49 million tonnes in 2011 to 41 this year, according to forecasts by Bolsa de Cereales, the Buenos Aires Grain Exchange.
Record-large corn and rice crops are forecast worldwide, with corn up 9 percent and rice up marginally. The wheat supply would drop by 2 percent and soybeans stocks will rise by 9 percent but still not as much as traders expected. It would be the sixth year in a row for record world corn production.
The U.S. Agriculture Department‘s first estimates for this year’s harvest and next year’s demand showed that domestic corn stocks will surge from a near record low this year to a seven-year high by September 2013, aided by expected record yields this year as farmers sprinted to plant an early crop.