Corn nosedives to three-year closing low
U.S. corn futures slid sharply to a nearly three-year closing low Tuesday, pressured by expectations for a record harvest this fall to replenish supplies.
Chicago Board of Trade September corn settled at 16 3/4 cents or 3.5% to $4.55 1/4 a bushel, the lowest settlement for the front-month contract since Sept. 2010.
The decline erased gains made on Monday, when the USDA cut its forecast for this year's U.S. corn harvest. The USDA report raised concerns about tighter supplies than expected, but its forecast of 13.763 billion bushels for this year's crop would still be a record.
Corn supply levels projected in the USDA report would be "more than adequate and not tight compared to the last few years," said Doug Bergman, a vice president with brokerage RCM Asset Management in Chicago.
- Follow along with Tuesday's trade in Marketing Talk
- Also: 'Listen to the corn market'
- More: Updated crop progress at the field level
- Is 'Peak Corn' ahead?
Some traders also expect corn yields to be better than predicted by the USDA. Cool temperatures during July kept stress on corn crops low as they went through their crucial pollination phase, fueling hopes for a big crop.
"People are thinking the corn yield is going to get revised upward from yesterday's number as we go through the next few months," said Dennis Smith, an analyst with Archer Financial Services in Chicago. "The weather forecast is also calling for things to warm up next week. That heat is exactly what this corn crop needs."
The USDA on Monday trimmed its corn yield forecast to 154.4 bushels an acre, from 156.5 last month.
Soybeans ended mixed, with nearby futures down on volatility amid low trading volume. Deferred futures were up on worries about dry weather threatening the U.S. crop as it goes through key stages of growth this month, including setting pods and filling them out with beans. Little rain is expected in the next 10 days.
The National Weather Service forecasts one-quarter inch of rain in the next five days in most of western Iowa and eastern Nebraska. Other parts of the Corn Belt will mostly receive from nearly nothing to one-tenth of an inch of rain.
The NWS's six- to 10-day outlook predicts below-average chances of rain in the western Farm Belt, including Iowa. The eight- to 14-day outlook predicts below-average chances of rain in central and northern Minnesota and in North Dakota.
Temperatures are also expected to warm up late this weekend or early next week, making the dry weather more worrisome for soybeans. Cool temperatures in recent weeks, expected to continue through the end of this week, have helped prevent soil moisture from evaporating.
Some traders Tuesday likely bought soybeans while selling corn, executing spread trades to bet on tightness in soybean supplies relative to corn. Analysts expect a record corn harvest this fall to replenish supplies of that commodity, while soy supplies are still expected to be relatively tight even after the harvest.
August soybeans, very thinly traded ahead of the contract's expiration on Wednesday, fell 14 cents or 1.0% at $13.59 3/4 a bushel. Most-active November soybeans rose 2 1/2 cents or 0.2% to $12.27 3/4 a bushel.
Wheat futures followed corn lower. Prices of the two grains are linked since they are direct substitutes in animal feed.
CBOT September wheat fell 6 3/4 cents or 1.1% to $6.28 1/4 a bushel, a 14-month closing low for the front-month contract. KCBT September wheat fell 4 cents or 0.6% to $6.96 1/4 a bushel. MGEX September wheat fell 4 1/4 cents or 0.6% to $7.32 1/2 a bushel.
-Kelsey Gee contributed to this article.
Write to Owen Fletcher at firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 13, 2013 15:18 ET (19:18 GMT)
DJ U.S. Corn Dives to Nearly 3-Year Closing Low->copyright
Sign up for our Market Email Alerts!