Corn Falls on Speculation Feed Demand May Slow; Soybeans Rise

Jan 14, 2014 3:19 pm ET

Jan. 14 (Bloomberg) -- Corn fell for the first time in three sessions on speculation that U.S. supplies will be larger than the government forecast because of slower demand for livestock feed. Soybeans and wheat rose.

The domestic hog-breeding herd fell last month and the cattle inventory on Dec. 1 was the second-smallest for that date since at least 1996, U.S. Department of Agriculture data show. On Jan. 10, the USDA estimated corn use rose 16 percent in the three months ended Nov. 30 to a record 4.32 billion bushels. That would imply an 18 percent jump in demand from livestock producers that doesn’t jibe with smaller herds, according to A/C Trading Co.

“The market is realizing that USDA probably overstated feed use last quarter and will find those supplies in the March update,” Jim Gerlach, the president of A/C Trading in Fowler, Indiana, said in a telephone interview. “Today’s weakness says there is no shortage of corn” after farmers harvested 29 percent more last year than in 2012, Gerlach said.

Corn futures for March delivery declined 0.7 percent to close at $4.315 a bushel at 1:15 p.m. on the Chicago Board of Trade, after rising 5.5 percent the prior two sessions. Prices fell 40 percent in 2013 on forecasts for a record U.S. crop.

Corn also fell on a report that China this week rejected U.S. shipments of dried distillers’ grain, an ethanol byproduct, because it contained a banned gene, Gerlach said.

China Crop

The USDA raised its Chinese corn crop estimate last week by 2.8 percent to a record 217 million metric tons, while cutting its import forecast 29 percent to 5 million.

“Exporters will find a new home for the Chinese cancellations, and that may slow demand later for U.S. corn from other Asian nations,” Gerlach said.

Soybean futures for March delivery gained 1 percent to $13.07 a bushel. The price rose for the fourth straight session, the longest rally in eight weeks, on increasing demand from China, the world’s top importer.

“Exporters are buying soybeans out of my storage bins because of rising shipments,” Kent Jessen, the grain manager for West Des Moines, Iowa-based Heartland Cooperative, which has 52 grain terminals across 17 counties.

Wheat futures for March delivery climbed 1 percent to $5.7925 a bushel.

--With assistance from Whitney McFerron in London and Phoebe Sedgman in Melbourne. Editors: Joe Richter, Patrick McKiernan