Drought slashes corn forecast. So prices fall?
Corn prices fall despite USDA forecast of worst corn yield in more than 15 years. Commodity traders had expected the poor forecast.
Prices¬†for wheat and¬†corn¬†are finally easing after a new crop estimate from the government came in line with the predictions of private analysts.
Corn¬†for December delivery settled down 14.5 cents to $8.0925 a bushel Friday.
Corn¬†has been mostly rising since late June, when it traded below $6 a bushel, because of the drought affecting farm states throughout the Plains and Midwest.
Wheat¬†prices¬†fell after the Department of Agriculture forecast adequate supplies for the grain. September wheat fell 27.75 cents to $8.8525 a bushel. Soybeans for November delivery rose 12.5 cents to $16.4375 a bushel.
The government slashed its forecasts for U.S.¬†corn¬†for a second month, predicting what could be the lowest average¬†corn¬†yield in more than 15 years.
Mark Schultz, chief analyst at Northstar Commodity in Minneapolis, said that the USDA's predictions didn't come as a surprise to the commodities market. "We've already had some private analysts suggesting the crop could be that low," Schultz said.
Schultz said there may be more¬†price¬†declines in store for¬†corn. "Tell me how many people want to buy¬†cornat that¬†price¬†level? Not many," Schultz said. "Because they're already losing money on whatever they're using that product for."
Schultz noticed that the USDA report signaled adequate wheat supplies, which could help bring down wheatprices. And since farmers often switch to using wheat as livestock feed when¬†corn¬†gets too expensive, a lower wheat¬†price¬†could at least rein in the¬†corn¬†prices.
Corn¬†is used in a wide variety of products including ethanol, animal feed, cereal, soda, cake mixes and candy bars. Rick Whitacre, a professor of agricultural economics at Illinois State University, says consumers may see modest¬†price¬†increases at grocery stores.
Whitacre said the biggest¬†price¬†jump is likely to be a 4 to 6 percent increase for beef and pork, as many ranchers have sold livestock as pastures dry up and feed costs rise.
In other commodities trading, energy and metals¬†prices¬†were mostly lower.
Natural gas fell 17.5 cents, or 5.9 percent, to $2.77 per 1,000 cubic feet, the lowest close in a month. Heating oil fell 2.45 cents to $3.0205 per gallon and gasoline less than a penny to $3.004 a gallon.
Gold for December delivery rose $2.60 to $1,622.80 per ounce.
September silver fell 3.5 cents to $28.062 per ounce. October platinum fell $12.90 to $1,399.90 per ounce. September copper fell 3.25 cent to $3.3925 per pound and September palladium fell $4.50 to $582.20 per ounce.
AP Business Writers Jim Suhr and Christina Rexrode contributed to this story.