(Corrects fifth paragraph to show that this year’s settlement high was April 29.)
July 3 (Bloomberg) -- Corn futures are heading for a bear market on the outlook for larger stockpiles and improved growing conditions in the U.S., the world’s largest producer and exporter.
Domestic stockpiles reached 3.85 billion bushels at the start of June, the U.S. Department of Agriculture said this week. That topped the average estimate of 3.72 billion in a Bloomberg survey of 26 analysts. Light showers and moderate temperatures in the Midwest are aiding corn pollination, according to World Weather Inc.
U.S. corn production that rose to a record last year is poised to top the high this season, adding to the outlook for a global glut. Stockpiles of soybeans and wheat are also climbing, helping to keep food costs in check, with the United Nations saying world food prices fell in June for the third straight month.
“This is follow-through selling given the much larger than anticipated stocks that we saw in corn,” Terry Reilly, senior commodity analyst at Futures International LLC in Chicago, said in a telephone interview. “More importantly is the nearly ideal weather outlook we’re looking at in the U.S. Midwest. Temperatures are a little bit on the cooler side over the next week or so, which promotes crop development.”
Corn futures for December delivery fell 0.1 percent to $4.175 a bushel at 10:46 a.m. on the Chicago Board of Trade. A close at $4.172 would mark a 20 percent drop from this year’s settlement high of $5.215 on April 29, meeting the common definition of a bear market.
Futures will fall to $4 in six months, Goldman Sachs Group Inc. said in a June 23 report.
Weather during the next week will favor crops, with scattered showers over parts of the Corn Belt, said Joel Widenor, a meteorologist at Bethesda, Maryland-based Commodity Weather Group. Seventy-five percent of U.S. corn was rated in good or excellent condition as of June 26, compared with 67 percent a year earlier, USDA data show.
Soybean futures for November delivery dropped 0.5 percent to $11.355 a bushel on the CBOT The oilseed is on pace for a fifth straight loss, the longest slump in a year.
Wheat futures for September delivery rose 0.8 percent to $5.8025 a bushel. The grain entered a bear market on June 11 on the outlook for ample global supplies.