Corn Hits New Low, Larger Yield Expected (CORN)

Corn hit its lowest price level since October 2010 on Monday, according to Bloomberg.

The slide was likely inevitable, given the fact that U.S. farmers planted a record 97.4 million acres this spring, the highest total since 1936, according to the U.S. Department of Agriculture in a report released June 28.

Analysts had expected 95.4 million acres, two million less than the total planted. Added to a four year high of 56.53 million acres of wheat and a record 77.7 acres of soybeans sown, Goldman Sachs Group Inc. said the USDA report showed a potential for large grain supplies after harvest.

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AgWeb quoted Jerry Gulke, president of agribusiness research and information analysis firm, the Gulke Group, who said the USDA report indicated that grain prices in general might continue their trip downward.

"We don’t need a big crop this year," Gulke said. "Now you just have to run the numbers. At what point will we not produce enough corn to meet demand?" According to Gulke, there’s little likelihood that the corn crop can be reduced. "There’s some good corn growing out there," he added.

The most recent USDA report contrasts sharply with fears, earlier this year that corn yield might be lower due to farmers’ inability to plant after early spring rains kept them out of their fields.

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As it turned out, rains subsided and farmers took advantage. At least that was their intent. The June 28 USDA report was likely a reflection of farmers’ intentions rather than actual acres planted in some areas – according to Bloomberg.

Morgan Stanley MS analyst Bennett Meier and others said, in a June 28 report that the USDA may lower its acreage estimate once the number of acres intended but not planted due to field work delays and rain are known.

Meanwhile, December corn was down just under one percent, trading at $5.06 per bushel on the Chicago Board of Trade Monday. Teucrium Corn ETF CORN was trading at $38.43 Down $0.24.

According to Bloomberg, Luke Mathews, commodity strategist at the Commonwealth Bank of Australia said in a report Monday, “The combination of a huge area planted and improving yield prospects should result in record U.S. corn production.”

While lower corn prices are bad news for farmers, high yields are a potential plus. Other winners include Archer-Daniels-Midland Co. ADM, the world’s largest corn processor, up $0.54 at $34.45 in early trading Monday, Tyson Foods Inc. TSN, up $0.09 at $25.78, and even fast food companies like The Wendy’s Company WEN, up $0.07 at $5.90 and McDonald’s Corp. MCD, up $0.98 at $99.98.

At the time of this writing, Jim Probasco had no position in any mentioned securities.