Chicago | Reuters — U.S. corn futures fell 2.2 per cent to their lowest level in 3-1/2 years on Wednesday, with falling prices for crude oil cutting into demand from the ethanol market, traders said.
A crumbling cash market for corn added to the pressure in the futures contracts as dealers in the country slashed bids they were offering farmers for their grain due to expected cuts in production at ethanol plants.
The ethanol market, which accounts for about 39 per cent of U.S. corn usage, has been staggered by the sharp drop in energy prices stemming from the global coronavirus pandemic.
Oil prices plunged on Wednesday, with U.S. crude futures hitting an 18-year low and Brent a 16-year low as Goldman Sachs said lockdowns to counter the coronavirus pandemic raised the prospect of the steepest-ever annual fall in oil demand.
“The depth of the corn break is going to depend upon the depth of the oil break, and that is going to depend upon how long the U.S. and Europe stay locked down,” Charlie Sernatinger, global head of grain futures at ED+F Man Capital, said in a note to clients.
Wheat and soybean futures were stronger, bouncing from recent lows, as the rippling effects of the spread of the coronavirus outbreak were seen as boosting demand.
The wheat market was led higher by a 2.9 per cent gain in K.C. hard red winter wheat futures, which stemmed from rising demand for pasta and baked goods as consumers are forced to eat at home because of the outbreak.
“The world has plenty of wheat, but it does not have plenty of quality milling wheat,” Arlan Suderman, chief commodities economist at INTL FCStone, wrote in a note to clients.
Soybeans rose as expected slowdowns at ethanol plants would force livestock and poultry producers to substitute soymeal for distillers dried grains (DDGs), a byproduct of ethanol production, in animal rations.
Chicago Board of Trade May corn futures settled down 8-3/4 cents at $3.35-1/4 a bushel. Prices for the most-active contract bottomed out at $3.32, the lowest since Sept. 30, 2016, early in the trading day.
CBOT May soft red winter wheat ended up nine cents at $5.08-1/4 a bushel. The May K.C. hard red winter wheat contract was 14-1/4 cents higher at $4.46-1/2 a bushel.
CBOT May soybean futures were 1-1/4 cents higher at $8.25-1/2 a bushel.
— Reporting for Reuters by Mark Weinraub in Chicago; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore.