Corn and wheat fell to the lowest in three months on speculation an end to the tax subsidy on ethanol production in the U.S. may slow demand for corn and increasing supply of feeds for livestock and hogs. December-delivery corn lost as much a 0.8 percent to $6.4775 a bushel on the Chicago Board of Trade, the lowest price for the most-active contract since March 17, before trading little changed at $6.53 a bushel at 2:55 p.m. in Singapore. September-delivery wheat declined as much as 1.7 percent to $6.9625 a bushel, and last traded at $7.0075. The U.S. Senate yesterday voted to eliminate the 45-cent tax credit for refiners on each gallon of the fuel mixed with gasoline, and the 54-cent tariff on Brazilian imports. Ethanol production was estimated by the U.S. Department of Agriculture on June 9 to use 5.05 billion bushels, or 38 percent of the nation’s forecast corn harvest this year. “It’s getting a lot of pressure,” Jonathan Barratt, managing director at Commodity Broking Services Pty., said by phone from Sydney today. “We’re expecting further losses for the grain sector.” Global demand for corn jumped 20 percent in the five years through the 2010-2011 season, as government incentives boosted use of the grain in ethanol production in the U.S., which produces about 39 percent of the global harvest, according to data from the USDA. The most-active contract jumped 72 percent in the past year on concern that higher ethanol use in the U.S. will drain more supply, as wet weather in the Midwest, the nation’s largest producing region, threatened to curb yields, and the market headed for a third year of global deficit. Favorable weather conditions in the U.S., a stronger dollar and concerns that global economic growth is slowing have also reduced the appeal of grains to investors, Barratt said. “There’s a lot of negativity out there,” he said, referring to investor sentiment toward the grain futures market. Soybeans for November-delivery declined 0.4 percent to $13.4475 a bushel, set for a 2.7 percent decline this week, while corn futures are headed for an 8.4 percent loss and wheat is poised for a 7.5 percent slump. To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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