US corn prices drop to one-month low on rising supplies

Corn futures fell for a fifth straight session, touching the lowest price in a month, after the US government said inventories before this year's harvest will be bigger than forecast.

 

''Inventories are growing, and that's going to be bearish for the market,'' said Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis. ''Bigger crops in South America will curtail US exports.''

 

Corn futures for May delivery fell 3.5 cents, or 0.9%, to US$3.655 a bushel on the Chicago Board of Trade, marking the first five-day decline since January 20.

 

Earlier, the most-active contract touched US$3.625, the lowest price since February 9. Corn has fallen 12% this year after the just-ended harvest produced a record crop.

 

The US corn harvest will reach a 13.131 billion bushels in the current crop-marketing year, which ends August 31, down from 13.151 billion projected in February, the USDA said. The latest assessment reflects a review of crops in Illinois, Minnesota, Michigan and Wisconsin.

 

''The crop could end up 40 or 50 million bushels smaller, but it's a small change,'' Schultz said.

 

World corn production in the year that began on October 1 will be a record 803.7 million tonnes, up from 797.8 million tonnes forecast last month and 1.6 % more than an estimated 794.5 million produced in the previous year, the USDA said.

 

Production forecasts were increased for Argentina, rising to 21 million tonnes from 17.2 million estimated last month, and South Africa, which is expected to produce 13.5 million tonnes, up from 11.5 million forecast in February.

 

World wheat inventories were forecast to rise 19 % to 196.8 million tonnes this year compared with the previous year, the largest amount since 2002, the USDA said.

 

''There's no shortage of grain in the world,'' said David Smoldt, the vice president of operations for broker FCStone LLC in West Des Moines, Iowa. ''The huge stocks of wheat will keep pressure on corn because any rally will encourage more consumption of wheat.''