By Michael Hirtzer
American corn farmers hit by historic spring floods are now facing the biggest quarterly price decline in five years on upbeat U.S. government crop estimates.
Growers and analysts alike have scoffed at the U.S. Department of Agriculture’s outlook for U.S. corn, which has been consistently more upbeat than private estimates. The relatively rosy projections have corn futures in Chicago on track for a quarterly decline of about 14%, which would be the biggest since 2014.
Still, money managers trimmed their bets on a price decline for the first time in more than two months, according to data from the U.S. Commodity Futures Trading Commission, as the market gears up for harvest data and corn inventory figures.
“USDA has factored in a sizable corn crop,” Brian Hoops, senior market analyst at Midwest Market Solutions in Springfield, Missouri, said by telephone. “It’s going to come down to yields at harvest — how good or bad they are.”
As of this week, only 7% of the corn crop was harvested, compared with the five-year average of 11%. Even with a smaller harvest, farmers are facing reduced demand. The ethanol sector that consumes more than a third of the crop has seen its margins squeezed, while Brazilian and Ukrainian corn are usurping U.S. grain in export markets.
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