Corn Plunges on Department of Agriculture's Projection of Larger Supplies

Corn fell to the lowest level allowd by the Chicago Board of Trade after the u.S Department of Agriculture said supply will be larger than originally projected in December.

Consequently corn futures dropped by the 30-cent limit to $3.8075 a bushel on the CBOT. That's closing in on the lowest price in two years experienced on December 5 of $3.055.

Corn inventories in the U.S. will come in at 1.79 billion bushels on August 31, a huge 21 percent more than the 1.474 billion bushels expected in December.

Estimates for the 2008 corn crop were also revised upward, adding another 0.7 percent to the total, while also cutting its projections for exports as well. As expected, production for animal feed and ethanol were also revised downward.

In 2007, corn in the U.S. was valued at $52.1 billion, the largest crop in the country.

Globally, corn levels will also increase from Decembers estimate, growing by 9.9 percent or 136 million tons.

USDA Raises Monthly Corn Forecast

The monthly forecast by the U.S. Department of Agriculture on Friday reported corn production for the year could be a much higher 12.2 billion bushels, a significant increase over September's projection of 12.1 billion bushels.

While wetter weather has a strong impact on production, the resultant success will probably put more downward pressure on corn prices, as the agency revised its season-average per bushel to a range of $4.20 to $5.20. That's a drop of 80 cent from September's estimate.

At the end of Thursday's session on the Chicago Board of Trade, corn for December delivery ended at around $4.38 a bushel.

Corn in Slight Rebound after Plunging Yesterday

Corn futures are enjoying a slight rebound today after falling by almost 5 percent in Tuesday trading.

On the Chicago Board of Trade, prices for December delivery rose by 4.75 cents to $4.88 a bushel.

Most industry watchers agree that until a decision one way or the other is made concerning a government bailout, things will remain in flux concerning most commodities. There will be another vote today to attempt to pass a bill.

Yesterday corn futures fell to $4.88 a bushel, the first time it dropped below the $5 mark since January. The almost 5 percent drop was the largest in 12 years.

Corn inventories as of September 1 has risen by 25 percent over a year ago according to the U.S. Department of Agriculture. Corn inventories stand at 1.62 billion bushels.

CBOT Corn Futures Surpass $6 First Time in Almost Three Weeks

For the first time in about three weeks, corn futures on the Chicago Board of Trade surged past the $6 mark, as the U.S. dollar weakens on stronger oil prices and geo-political concerns.

Nearby September corn on the CBOT increased by 22 1/2 cents to $5.97 3/4, and most-active December gained 22 1/2 cents to end at $6.17 1/2 a bushel.

One other factor in the price of corn futures is Midwest rain may not be enough to pull corn through to a strong harvest. It's also slightly possible that later maturity levels could make corn vulnerable to frost further on in the season.

Kernals now filling out may not be helped by the forecasted wet weather over the next 7-10 days in the midwest.

Corn exports also fell far below the projected 850,000 to 1.4 million tons looked for; only 691,500 metric tons sold the week ending August 14.

According to the U.S. Department of Agriculture, 196,600 metric tons were sold for 2007-08, while 494,900 tons were sold for 2008-09.