September 8, 2009

Corn growers in the US, the world's largest exporter, may hold back as much as they can store to keep futures prices from falling below US$3 a bushel, the Iowa Corn Promotion Board said.

 

Farmers who lease part of their land are probably losing money already after futures dropped to less than US$3.50 a bushel, dragging down the prices elevators pay for corn, said Kevin Rempp, a director of the board.

 

Chicago elevator prices fell more than six percent last week, according to USDA data.

 

Corn futures fell 17 percent this quarter, which are near a three-year low on expectations production in the US may rise as favourable weather boosts yields.

 

Corn for December delivery fell as low as US$3.02 a bushel on the CBOT (Sept 8), the weakest since October 2006.

 

Prices paid by elevators, which store the grain before shipment, fell to a range of US$2.7725 to US$2.9625 a bushel in Chicago on September 4, from US$3.0125 to US$3.1625 on August 31, the USDA said.

 

Iowa produces an average of 56 million tonnes of the grain a year, more than any country other than China, Rempp said.

 

US corn output could rise to 13.01 billion bushels and may reach a record 13.304 billion with normal freeze dates and rainfall, Informa Economics Inc. said September 3, while the USDA's forecast was at 12.761 billion.

 

An increase in crude oil prices may help boost prices for corn used in ethanol, said John Baize, president of John C. Baize & Associates, an agricultural trading consultant to the American Soybean Association.

 

Corn prices may rise to US$211.79 a tonne when crude oil trades at US$80 a barrel, Baize said on September 7.