US corn prices drop under $5/bushel on economy

01 October 2008 15:56  [Source: ICIS news]

HOUSTON (ICIS news)--US corn prices traded under $5/bushel on Wednesday, pressured by growing woes in financial markets and weaker ethanol and animal feed demand for the product, traders said.

 

Prompt corn in Chicago was at $4.94/bushel in early morning trading, up from $4.87/bushel at close on Tuesday, but down from $5.63/bushel one week ago.

 

The front-month on Tuesday closed under $5/bushel for the first time in 2008.

 

Market sources attributed the softening to pressure from Wall Street and news that US corn inventories were sharply up compared with one year earlier.

 

US corn stocks as of 1 September totalled 1.62bn bushels, up by about 25% from 1.30bn bushels one year before, the US Department of Agriculture (USDA) said on Tuesday.

 

One ethanol producer said the jump was due to weaker livestock consumption, while a market watcher said slower demand from ethanol plants was also a factor behind the increase.

 

US corn prices peaked at nearly $7.90/bushel in late June after flooding in the Midwest that month stoked fears that the US corn crop would be compromised.

 

A USDA report on 29 September said that 61% of the US corn crop in 18 key-producing states was in good/excellent condition in the week ended 26 September.

 

That figure is up from 59% a week earlier but down from 63% in the comparable week one year ago.

 

The USDA expected the US to produce 12.07bn bushels of corn in the 2008/09 crop year. That projection compares with a crop of 13.1bn bushels in 2007/08, the record harvest by US farmers.

 

US ethanol producers were expected to consume 4.1bn bushels of corn in 2008/09, up from 3bn bushels in 2007/08, according to USDA figures.

 

($1 =  €0.71)

 

For more on ethanol visit ICIS chemical intelligence

Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels

 

By: William Lemos
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