Corn Falls for Second Day After U.S. Delays Ethanol Decision

Corn fell for a second day after U.S. regulators postponed a decision to raise ethanol usage in gasoline until mid-2010, prolonging uncertainty about demand prospects for the grain used to make the fuel additive.

The Environmental Protection Agency kept the blend at a maximum of 10 percent yesterday and said it may consider an increase after engine studies are completed. Ethanol producers had sought a rate of 15 percent.

“The delay is disappointing, which has pressured corn,” said Han Sung Min, a manager at the international marketing division of Korea Exchange Bank Futures Co. in Seoul. “Still, the longer-term prospect for the grain is bullish since the U.S. will eventually expand ethanol use.”

Corn futures for March delivery fell 1.5 cents, or 0.4 percent, to $4.13 a bushel in electronic trading on the Chicago Board of Trade at 2:14 p.m. Paris time. The grain slipped 0.7 percent yesterday after earlier reaching $4.2125, the highest level since Nov. 18.

“Corn, and indeed the grains generally, broke late yesterday and are a bit weaker this morning, despite the strength of gold, following disappointment that the U.S. government has chosen not to increase ethanol usage,” economist Dennis Gartman said in his daily letter.

The U.S. Energy Independence and Security Act of 2007 calls for the nation to use 12 billion gallons of renewable fuels such as ethanol next year, up from 10.5 billion in 2009. The law requires the U.S. to use 15 billion gallons by 2015.

Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, according to government data. Prices surged 14 percent in November, the biggest monthly gain since June 2008, following delays in the U.S. harvest.

Wheat futures for March delivery slid 0.2 percent to $5.83 a bushel, adding to yesterday’s 0.8 percent decline. Milling wheat for January delivery traded on Euronext in Paris slipped 0.2 percent to 132 euros ($199.38) a metric ton at 2:26 p.m.

Soybeans for January delivery fell 0.4 percent to $10.5525. The oilseed, used in animal feed in competition with corn, was little changed yesterday after gaining 8.6 percent last month.

source: bloomberg