Corn Falls for Third Month as U.S. Crop Production May Increase

By Jae Hur

Aug. 31 (Bloomberg) -- Corn was poised for a third monthly decline on speculation the U.S. crop condition may improve, paving the way for increased production. Soybeans also fell.

The U.S. Department of Agriculture is to issue its weekly crop condition report after Chicago trading closes today. About 70 percent of the corn crop was in good or excellent condition on Aug. 23, up from 68 percent a week earlier, the USDA said last week.

“We may see a further increase in the weekly USDA corn crop ratings later today,” Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co., said. “It will be a bumper harvest.”

Corn for December delivery fell 0.6 percent to $3.27 a bushel at 11:48 a.m. Singapore time after trading between $3.265 and $3.32 in electronic trading on the Chicago Board of Trade. The contract touched $3.115 on Aug. 17, the lowest in more than eight months.

The grain has lost 6.4 percent this month, after declining 20 percent during the previous two months on cool temperatures and abundant soil moisture. The USDA has predicted a crop of 12.761 billion bushels, 5.5 percent more than last year and the second-largest ever.

“Record-high yield expectations for the U.S. 2009 crop mean the corn market will require substantial stimulus from the demand-side if we are to see any sustained rallies,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney.

Mexico, the world’s second-biggest corn buyer, may boost imports of the grain to a record as dry weather harms crops in central and northern regions, according to the president of the National Confederation of Farmers.

Mexico Imports

Mexico, where corn is a staple used in tortillas and hot drinks, may import 12 million metric tons of yellow corn this year, Cruz Lopez Aguilar, president of the Mexico City-based body, said Aug. 28. The USDA estimates Mexico will import 9 million tons of corn in the 12 months starting Oct. 1, up from 7.4 million tons in the current marketing year.

Soybeans for November delivery fell as much as 1.5 percent to $9.955 a bushel and were at $9.975 as of 12 p.m. Singapore time. The most-active contract rose 3.9 percent last week, the first gain in three weeks, on concern that the slow pace of plant growth may increase the risk of damage from an early Midwest freeze in the U.S.

‘Dwindling’ Supplies

The neaby September contract jumped 11 percent last week “thanks to anxiety over dwindling old-crop supplies combined with a robust demand profile,” Hassall said. “Given the late- maturing U.S. crop will be more at risk to late-season weather events, the market will retain a palpable sense of anxiety until U.S. new-crop beans hit the bins.”

Wheat for December delivery dropped 0.6 percent at $4.9225 a bushel as of 11:58 a.m. Singapore time after trading between $4.9175 and $4.99. The price gained 1.6 percent last week, the first increase since July.

The contract has dropped 6.8 percent this month, the third monthly loss. World production will total 662 million tons, the International Grains Council said Aug. 27, up from 654 million tons forecast in July.

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