October 1, 2008

 

Corn prices plunge as USDA unveils abundant corn stocks 

Corn prices fell to its lowest level in eight months after the USDA reported an unexpected jump in domestic inventories.

 

Inventories on Sept. 1 totaled 1.624 billion bushels, higher than the 1.576 billion estimated on Sept. 12, the USDA said in a report.

 

This was contrary to expectations of stocks of 1.539 billion.

 

Higher corn stocks meant feed demand has been lower than expected in recent months.

 

Further, the USDA has forecast a 14-percent drop in demand for corn feed in the marketing year that began Sept. 1.

 

Corn prices dropped 16 percent this month and 35 percent for the quarter.

 

Analysts say with more producers substituting corn with wheat, corn stocks have become more abundant.

 

Corn futures for December delivery fell 22 cents, or 4.3 percent, to US$4.91 a bushel at 10:59 a.m. on CBOT.

 

Corn may also suffer its biggest quarterly decline ever.

 

The most-active contract has dropped 39 percent since reaching a record US$7.9925 on June 27.

 

Crop conditions also bode well for the current corn crop even though it is still behind in development relative to last year. About 61 percent of the corn crop was in good or excellent condition as of yesterday, compared with 59 percent a week earlier and 63 percent a year earlier, the USDA said.