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Corn falls, lingers near 10-1/2-year low on prospects of dismal ethanol demand

U.S. corn futures edged down on Tuesday, hovering near their lowest in more than 10 years, as a slump in U.S. crude futures was expected to slash demand for the grain-based ethanol.

Wheat rose nearly 1% as the U.S. Department of Agriculture (USDA) said the condition of the national crop was below market expectations, stoking fears of tight supplies, while soybeans fell more than 0.5% to touch a one-month low.

The most-active corn futures on the Chicago Board of Trade were down 0.2% at $3.2-1/2 a bushel, as of 0318 GMT, having closed 0.8% firmer in the previous session when prices hit a Sept 2009 low of $3.13-1/2 a bushel.

Analysts said corn futures were under pressure as traders worry about the impact of the coronavirus pandemic on two major drivers of demand for corn – ethanol producers and meat producers.

“Negative crude oil prices bolster worries about U.S. ethanol demand,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.

“The COVID-19 epidemic is also shutting more meat processing plants in the U.S. too.”

However, further losses were capped by concerns about the pace of planting corn in the United States, analysts said.

The U.S. Department of Agriculture (USDA) said U.S. farmers were able to plant 7% of their intended corn acres, as of Sunday, matching the average of analyst estimates in a Reuters poll.

The most active wheat futures rose 0.9% to $5.52-1/2 a bushel, having closed 2.6% higher on Monday when prices touched an April 13 high of $5.62 a bushel.

Wheat rallied after the USDA said 57% of the winter wheat crop is in “good-to-excellent” condition, but a drop from 62% the previous week. Analysts surveyed by Reuters on average had expected a smaller decline of one percentage point.

For spring wheat, the USDA said the crop was 7% planted, lagging the five-year average of 18%, and behind the average of analyst expectations at 11%.

The report stokes fears about global supplies, coming just days after Russia’s deputy agriculture minister Oksana Lut said the country will suspend exports until July 1 once its second-quarter export quota is exhausted, which is expected to happen in mid-May.

Ukraine, another major supplier, is ready to ban wheat exports if sales exceed limits agreed with traders, the deputy economy minister in charge of agriculture said last week.

The most active soybean futures were down 0.7% at $8.30-1/4 a bushel, near the session low of $8.29 a bushel – the lowest since March 19. Soybeans closed 0.7% lower in the previous session.

The USDA also said that U.S. farmers planted 2% of their intended soybean acreage by Sunday, in line with the soybean estimate in the Reuters poll and just ahead of the five-year average of 1%.
Source: Reuters (Reporting by Colin Packham, Editing by Sherry Jacob-Phillips)

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