Corn prices fall sharply on improving crop report

AP News
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Posted: Jun 14, 2011 4:03 PM
Corn prices fall sharply on improving crop report

Corn prices are falling after a spell of warm, dry weather left more than two-thirds of the crop in good condition.

Corn settled down 27 cents, or 3.5 percent, at $7.555 a bushel Tuesday. That's still more than double what the price was in mid-June of last year. Traders speculated that this year's corn crop could be huge, increasing corn supplies and pushing prices lower.

Wheat and soybeans also fell. Energy and metals prices were mixed.

The U.S. Agriculture Department reported late Monday that 69 percent of the corn crop was in good-to-excellent condition and 31 percent was in fair-to-very-poor condition. At this time in 2010, 77 percent of the crop was in good-to-excellent condition and 23 percent was in fair-to-very-poor condition.

The report surprised some investors, who had not expected a big improvement after heavy rains and flooding delayed spring planting in key growing regions, said Mike Zuzolo, president of Global Commodity Analytics & Consulting LLC.

Corn has been in short supply around the world. Analysts have said U.S. farmers need to produce as big a crop as possible this year to help ease some of that tightness.

Spring wheat planting lagged the five-year average due to delays caused by rain and cool weather, especially in Montana and North Dakota. About 68 percent was in good-to-excellent condition, compared with 86 percent at this time in 2010, the department said.

Telvent DTN analyst Darin Newsom believes wheat prices were hurt because rain has benefited wheat growing regions in parts of Europe, which could increase supplies of wheat.

About 67 percent of the U.S. soybean crop was in good-to-excellent condition and 28 percent in fair condition. A year ago, 73 percent of the crop was in good-to-excellent condition and 22 percent was in fair condition.

July wheat fell 11.75 cents to settle at $7.3125 a bushel and July soybeans dropped 14.75 cents to settle at $13.68 a bushel.

Copper prices rose 3 percent after China said its industrial output rose 13.3 percent in May. China's investments in construction, factory equipment and other fixed assets rose 25.8 percent in January-May over the same period a year earlier. China, which has the world's second-largest economy, is a huge importer of commodities such as copper. Changes in its economy can have a large effect on commodities prices.

Copper for July delivery rose 12.05 cents to settle at $4.155 a pound.

In other metals contracts for July, silver rose 67.4 cents to settle at $35.411 an ounce. Platinum fell $11.90 to $1,794.90. August gold rose $8.80 to settle at $1,524.40 an ounce and September palladium fell $7.60 to $792.75 an ounce.

Benchmark oil for July delivery rose $2.07 to settle at $99.37 per barrel on the New York Mercantile Exchange.

In other Nymex contracts, heating oil rose 2 cents to settle at $3.1258 per gallon, gasoline gained 6.78 cents to $3.0646 per gallon and natural gas fell 6.5 cents to $4.581 per 1,000 cubic feet.