July 22, 2008

Corn loses 20 percent of its value in a month

Corn prices have lost 20 percent of its value in a month as contracts for December delivery slumped 20.25 cents, or 3.2 percent, to settle Monday (July 21, 2008) at US$6.08 a bushel on the CBOT.

This was in stark contrast to June, when corn soared more than 20 percent and hit a record high of US$7.96 a bushel, due to Midwest flooding.

Since then, it has given up its gains after weather turned favorable and floodwaters receded.

December contracts saw the lowest closing since April 25. Earlier, it fell to an intraday low of US$6.03 a bushel.

Good weather is having an impact on corn prices, analysts said, especially during the critical corn-pollination period starting from now until the end of July. Corn pollination would determine corn yield. 

According to the USDA, 34 percent of the corn crop was pollinating as of July 20, down from 72 percent a year earlier and below the five-year average of 60 percent.

The slump in corn prices has also affected soy. Soy November contracts lost 3.1 percent to US$14.03 a bushel on the CBOT, and September wheat fell 1.6 percent to US$7.91 a bushel.

Soy flowering is at 45 percent, compared to 70 percent a year earlier and below the five-year average of 65 percent, according to the USDA.