Corn Declines on Speculation Dry Weather to Boost U.S. Planting

By Jae Hur

May 18 (Bloomberg) -- Corn prices in Chicago declined for a second day on speculation that dry, warm weather will firm soils in the U.S. Midwest, enabling farmers to accelerate planting. Soybeans and wheat also dropped.

A high-pressure area has moved over the central U.S. states, bringing warm temperatures and reducing the likelihood of rainfall this week, according to AccuWeather.com.

“Corn has been under pressure as dry weather will help U.S. farmers to speed up planting in the Midwest,” Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo. A slump in global equity markets and weaker oil prices also dragged down the grains and oilseed complex, he said.

Corn for July declined as much as 2.6 percent to $4.0625 a bushel, the lowest since May 7, and was at $4.10 by 3:23 p.m. Tokyo time on the Chicago Board of Trade. The price dropped 0.9 percent last week. Corn reached a seven-month high of $4.34 on May 13 after the U.S. Department of Agriculture forecast reserves on Aug. 31, 2010, will fall to a six-year low.

“The acceleration of U.S. corn planting would be a bullish factor for soybeans” as it may reduce acreages for the oilseed, while recent jumps in prices may curb demand from China, the world’s biggest soybean importer, Kikukawa said.

Soybeans for July delivery fell as much as 1.5 percent to $11.135 a bushel and last traded at $11.205. The most-active contract rose 1.7 percent last week, the third weekly gain. The price touched $11.5625 on May 15, the highest since Sept. 29.

U.S. sales to China rose 42 percent since Sept. 1 and made up 56 percent of all exports, USDA data show.

July-delivery wheat fell as much as 2.5 percent to $5.6325 a bushel and last traded at $5.705. The price fell 2.3 percent last week, snapping a four-week rally.

Australian Wheat

Australia, the world’s fourth-largest wheat exporter, may produce more of the grain than previously forecast after rainfall in the nation’s east, National Australia Bank Ltd. said.

Output from the crop being planted may total 22.2 million tons, 1 million ton more than forecast last month and about 4 percent higher than last year’s crop, Frank Drum, the bank’s agribusiness economist, said today.

World stockpiles will climb 8.9 percent to 181.9 million tons in the year ending May 31, 2010, the U.S. Department of Agriculture said May 12. Global production in the year that ends on May 31 may rise to a record 682.7 million tons, the USDA said. The following year’s production will total 657.6 million tons, the agency predicts.

To contact the reporter for this story: Jae Hur in Tokyo at jhur1@bloomberg.net