April 16, 2020

Corn futures hit record low as ethanol production drops

United States' corn futures reached a 3 ½ year low after record low ethanol output, with plunging demand for the commodity during the COVID-19 pandemic, reported Reuters.

The Chicago Board of Trade (CBOT) also showed falling soybean and wheat futures.

The US Energy Information Administration said corn-based ethanol demand has fallen, with output now 102,000 barrels daily compared to 570,000 barrels daily on average before the pandemic. Inventories are now at a record high.

The US Department of Agriculture (USDA) estimates that farmers will plant a major corn crop in spring, which analysts believe will result in taxing supplies of corn.

Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage said only supply disruptions could push corn prices up.

May corn prices on the CBOT ended US$3.19-1/4 a bushel, down 2.1% and a new contract low. July corn reached US$3.26-3/4 a bushel, a 1.7% fall and also a contract low.

As for wheat, May prices closed 1.5% lower at $5.40-1/4 a bushel, while May soybeans ended down 0.7% at $8.42 a bushel.

The market is affected by US meat production facility closures by major companies such as Cargill and Smithfield Foods. A Singapore-based trader based at an international trading company said this might be a major problem for soymeal demand.

-  Reuters