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Corn at lowest in 4 years behind surging supply
Even the possibility of tensions in Eastern Europe blocking shipments wasn’t enough to keep corn from falling to a four year low on the back of growing production in the United States.
Futures for corn with a delivery date in December declined by as much as 1.4% today to fall to a price per bushel of $3.7325 and record the lowest among most active contracts since July 14, 2010 on the Chicago Board of Trade. The commodity is on track for its third consecutive monthly drop and was trading at $3.7375 early afternoon Singapore time.
Outlook that another greater than expected harvest in the US will further global supplies has driven corn futures to slide down 25% for the year so far. It is predicted by the US Department of Agriculture that US production will soar to its second highest in history with 13.86 billion bushels due to cool weather in the planting regions of the Midwest.
Analyst Paul Deane from the Australia & New Zealand Banking Group Ltd. says that because of below average temperatures and sufficient rainfall, “the conditions are perfect for yields to be above trend.” The USDA said earlier this month that corn inventories around the world are expected to surge to its highest in 14 years of 188.05 million tons even before the next harvest comes in 2015.
Prices momentarily climbed last week by 2.4% when a passenger jet from the Malaysia Airlines was brought down near the border of Ukraine and Russia to escalate the situation in Europe. Ukraine was the third biggest shipper of corn in the year 2013 to 2014.
