BLBG:Corn Declines as Price Gains May Limit Use in Ethanol Production
Corn dropped as its advance this year may further curb use of the grain for ethanol production, which is already at the lowest level since 2010. Wheat and soybeans also fell.
The contract for March delivery lost as much as 0.5 percent to $7.17 a bushel on the Chicago Board of Trade, the lowest price for the most-active contract since Jan. 14, and was at $7.175 at 10:33 a.m. Singapore time. Futures advanced 2.8 percent this year, extending an 8 percent increase in 2012.
U.S. production of ethanol fell in the week ended Jan. 11 to 784,000 barrels a day, the lowest level since the U.S. Department of Energy’s statistical unit began tracking weekly data in June 2010, the government said last week. The weekly DOE numbers are due for release today.
“The market will focus on tonight’s weekly U.S. ethanol production report for signs of corn demand rationing,” Luke Mathews, a Sydney-based analyst at Commonwealth Bank of Australia, said in a report e-mailed today.
The U.S. Department of Agriculture estimated on Jan. 11 that ethanol producers will use about 4.5 billion bushels of corn, or about 42 percent of the nation’s 2012 harvest.
Based on March contracts for corn and ethanol, producers are losing 28 cents on each gallon of the fuel made, according to data tracked by Bloomberg. The figures exclude the revenue that can be made from the sale of dried distillers’ grains, a by-product of ethanol production that can be fed to livestock.
Soybeans for March delivery lost as much as 0.7 percent to $14.275 a bushel in Chicago, before trading at $14.295.
Brazil’s soybean and corn growing areas in Rio Grande do Sul and Parana will have showers totaling 3 millimeters to 19 millimeters through tomorrow, DTN said in a report yesterday. Rains helped rebuild soil moisture in the South American nation that’s forecast by the USDA to be the world’s largest soybean exporter and second-biggest corn shipper this year.
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
