Denatured ethanol for November delivery fell 1.2 cents, or 0.7 percent, to $1.675 a gallon on the Chicago Board of Trade after touching $1.668, the lowest price since July 2010. Futures have dropped 24 percent this year.
Corn futures plunged to a three-year low after the U.S. Department of Agriculture boosted its inventory estimate by 25 percent.
Soybeans dropped the most in six months as supplies topped analyst estimates by 11 percent.
Corn futures dropped 2.8 percent to close at $4.415 a bushel at 1:15 p.m. on the Chicago Board of Trade. Earlier, the price touched $4.4075, the lowest for a most-active contract since Sept. 1, 2010. Corn has tumbled 37 percent in 2013.
Temperatures are poised to pass 38°C (100°F) in the coming week in western corn-belt states such as Iowa. The heat revived memories of the devastating drought in the US last year, which slashed grain output and sent prices soaring.
A heat wave in parts of the Plains states and Midwest kept temperatures Monday as high as 20 degrees above normal, and it’s likely to last until the end of the week.
CBOT corn for September delivery ended down 2-3/4 cents at $4.89-1/4 a bushel after bottoming out at $4.88-1/4 earlier in the session. The intraday low was the lowest price for front-month corn since $4.87-3/4 on Oct. 7, 2010.
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.
Despite the rain from November to January, the American cultures should still undergo a major water deficit in 2013. The drought of 2012, the worst in the last fifty years, has resulted in the soil drying out which is difficult for the farmers to manage.
According to the Palmer Drought Index, 56% of the U.S. are still in drought at the end of February, mainly in the High Plains region. Kansas, the largest producer of wheat in the United States, but also Nebraska, Oklahoma and South Dakota are in extreme drought according to the latest report from the U.S. Drought Monitor.
In 2012, corn prices skyrocketed, demand remained high, making the 2012 crop the most valuable ever produced. What will happen next? Will the drought that impacted several countries and especially the United States continue in 2013?
The US corn production could reach 366.6 million tonnes 2013-2014, the U.S. Department of Agriculture believes. This is 53 million tons more than in 2012-2013. The USDA revised its long-term forecast model to include the 2012 drought in its 25-year average. Forecasters expect the area sown for all types of cereals to be 102.6 million hectares in 2013-2014, but to decline over the next three years for corn. Specifically for corn, the USDA expects 38.78 million hectares in 2013, and 36.3 million hectares in 2014 (vs. 39 million hectares in 2012).
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 supply hit its lowest in eight years as the USDA reported in the Grain Stocks Report and Small Grains Summary Report , signaling stronger demand for the grain. So, Corn prices surged the most in three months.
Corn Stocks Down 12 Percent from September 2011
Old crop corn stocks in all positions on September 1, 2012 totaled 988 million bushels, down 12 percent from September 1, 2011. Of the total stocks, 314 million bushels are stored on farms, down slightly from a year earlier. Off-farm stocks, at 675 million bushels, are down 17 percent from a year ago. The June – August 2012 indicated disappearance is 2.16 billion bushels, compared with 2.54 billion bushels during the same period last year.