Corn Demand Drop May Be Keeping Ahead Of Global Drought Issues, Lower Projections For 2009 - B'Berg

[hatrack]

Feb. 10 (Bloomberg) -- Corn fell for the first time in four sessions on speculation that global demand is declining faster than drought is damaging crops in South America. Worldwide corn reserves will total 136.7 million metric tons at the end of September, up 7 percent from a year earlier, the U.S. Department of Agriculture said today. Global output will be 786.5 million tons, down 0.6 percent from a January forecast, the agency said, citing smaller South American crops. Demand will reach 777.5 million tons, down 0.7 percent from the recent projection, according to the USDA.

“Supplies are more than adequate despite the drop in South American crops because of eroding demand,” said Dale Schultz, a commodity specialist at Gottsch Enterprises in Hastings, Nebraska. “The USDA report today says that until the world economy stabilizes, demand for corn is vulnerable to further cuts.”

Corn futures for March delivery fell 0.75 cent, or 0.2 percent, to $3.7675 a bushel on the Chicago Board of Trade, after gaining 5.4 percent the previous three sessions. The price, which reached a record $7.9925 in June, fell to $3.055, on Dec. 5, the lowest for the most-active contract in more than two years. Corn earlier rose as much as 0.7 percent on speculation that smaller crops forecast in South America will spur export demand. The USDA reported earlier today that Mexico had purchased 206,000 tons of corn from U.S. exporters.

Argentina, Brazil Outlook

Farmers in Argentina will harvest 13.5 million metric tons of corn this season, down 18 percent from a January estimate and 35 percent less than last year, USDA said in today’s report. The estimate for Brazil’s corn crop was cut to 49.5 million tons, 3.9 percent less than predicted in January and down 16 percent from last year. U.S. inventories on Aug. 31 were forecast at 1.79 billion bushels (45.5 million tons), the highest in three years. “When a market fails to respond to bullish news, it usually means lower prices,” Schultz said. Corn will “drift lower until prices are cheap enough” to allow for livestock feeders and ethanol producers to make money, he said.

EDIT

http://www.bloomberg.com/apps/news?pid=20601012&sid=aOIDwu4G09vk

[Tashca]

1. This is a good analysis ..

So many people are not taking into account that this economic downturn is world wide. Many farmers forget they are in a world market. Here in the U.S. these farmers will be making planting decisions based on what happens the next 30days. I at one time thought they might plant more corn acres....many are now leaning toward planting soybean acres instead.....much less risk...

[Barrett808]

2. "Corn is the biggest U.S. crop" -- well, biggest *legitimate* crop. n/t