Corn-Crop Drought Damage Less Than Expected Spurs Price Drop [View all]
Corn output in the U.S., the world’s largest grower, will fall by less than analysts expected after the worst drought in more than 50 years, the government said. Prices fell to a seven-week low.
Farmers will collect 10.727 billion bushels, the smallest crop in six years and down 13 percent from 12.358 billion in 2011, the U.S. Department of Agriculture said today in its second survey-based estimate for the crop. Last month, the USDA forecast 10.779 billion. The average prediction of 35 analysts surveyed by Bloomberg was for 10.420 billion. Supplies of the grain on Aug. 31, 2013, will be greater than analyst estimates.
Crop conditions as of Sept. 9 were the worst since 1988, with the harvest about 15 percent complete, the USDA said earlier this week. Since mid-June, corn prices have surged 54 percent, reaching a record $8.49 a bushel on Aug. 10 on the Chicago Board of Trade. After the USDA report, futures for December delivery fell 1.4 percent to $7.6675 as of 7:48 a.m., after touching $7.5925, the lowest for a most-active contract since July 24.
The larger-than-expected estimate is “a psychological blow to the market,” Randy Mittelstaedt, the director of research for R.J. O’Brien & Associates in Chicago, said before the report. “It’s still a small crop, and that means the market cannot afford to drop prices, or that will stimulate increased demand.”