October 4, 2010

CBOT corn drops further as supplies hit three-year high

CBOT corn slumped for a third day to a one-month low as the advancing US harvest prompted investors to sell the grain, and after the US said supplies left from last year's crop climbed to the highest level since 2006.

December-delivery corn lost as much as 2.5% to US$4.543 a bushel, the lowest level since September 3, on the Chicago Board of Trade (CBOT). The contract tumbled US$0.30 on October 1, the maximum allowed by the Chicago exchange.

Inventories on September 1 rose 2% to 1.708 billion bushels from a year earlier, the US Department of Agriculture said on September 30. That was 322 million bushels higher than the agency's September 10 estimate. About 27% of the corn crop was harvested as of September 26, up from 18% a week earlier, the USDA said last week.

"With the forecast for increasing stockpiles, corn remained under pressure in the US," said Hiroyuki Kikukawa, general manager of research at IDO Securities Co.

The grain surged 33% in the third quarter, the steepest gain for that period since 1974. Corn had the fourth- biggest third-quarter rise among 19 raw materials in the Reuters/Jefferies CRB Index.

In the Midwest, the next seven days will bring continued dry weather and temperatures rising to above-normal by the end of the week, forecaster Telvent DTN Inc. said. This would affect US corn and soy fields, which have a bearish influence on trade.

In September, the USDA predicted a record corn crop of 13.16 billion bushels (334.3 million tonnes), up 0.4% from last year. US soy output will total 3.483 billion bushels, up 3.7 % from a record 3.359 billion last year, the USDA said.

Soy for November delivery fell as much as 1.4% to US$10.42 a bushel and last traded at $10.435. The oilseed lost 4.5% on October 1, the biggest drop for a most-active contract since July 2009. Prices fell 6.1% last week, the most in 13 months.

Wheat for December delivery dropped as much as 1.3 % to US$6.463 a bushel. Prices dropped 9% last week, the biggest drop since the period ended January 15.