May 4, 2011

 

US corn, soy futures drop as demand fades

 

 

US corn and soy futures had dropped for the second straight day on speculations that demand for US stocks will recede after price soars to the highest since mid-2008.

 

Archer Daniels Midland Co., the largest grain processor, delivered 1.96 million bushels of corn against expiring May futures, exchange data show. Brazil, the second-biggest soy shipper, may harvest 72.6 million tonnes this year, Celeres, a crop forecaster, said. That topped a previous estimate of 70.6 million tonnes.

 

"ADM making delivery of corn was a shocker and is a sign of slowing demand," said Don Roose, the president of US Commodities Inc. in West Des Moines, Iowa. "Increasing supplies in South America will slow demand for US soybeans."

 

Corn futures for July delivery fell US$0.1075, or 1.5%, to close at US$7.2375 a bushel at 1:15 p.m. on the CBOT. On May 2, the price dropped 2.9%. The most-active contract has risen 95% in the past year, touching US$7.8875 on April 11, the highest since June 2008.

 

Soy futures for July delivery dropped US$0.2925, or 2.1%, to close at US$13.6375 a bushel. The price declined US$0.01 on the other day.

 

On February 11, the commodity reached US$14.5575, the highest since July 2008. The oilseed used to make animal feed and cooking oils has gained 38% in the past year.

 

Prices also fell on speculation that warmer, drier weather will accelerate US planting that has been delayed by rain and cold temperatures, Roose said. About 13% of the US corn crop was planted as of May 1, compared with 40% on average the past five years, the USDA said.

 

Archer Daniels said that fiscal third-quarter profit rose 37% as food-ingredient demand climbed.

 

"Global demand for crops and agricultural products remains strong," ADM Chief Executive Officer Patricia Woertz said.

 

Wheat futures for July delivery rose US$0.015, or 0.2%, to close at US$7.9325 a bushel. The price has gained 58% in the past year as adverse weather reduced global production.

 

Corn is the biggest US crop, valued at US$66.7 billion in 2010, followed by soy at US$38.9 billion, government figures show. Wheat is the fourth-largest, behind hay, at US$13 billion.