Forexpros – Corn futures tumbled to a two-month low on Tuesday, as ongoing concerns over increasing competition for U.S. corn exports and a downgrade warning from ratings agency Standard & Poor’s on 15 euro zone countries drove prices lower.
On the Chicago Mercantile Exchange, corn futures for March delivery traded at USD5.8312 a bushel during European morning trade, tumbling 1.27%.
It earlier fell by as much as 1.65% to trade at USD5.8012 a bushel, the lowest since October 4.
Corn prices have declined in the past four trading sessions, the longest losing streak since mid-November as large South American crop prospects and increased competition for U.S. exports from countries in the Black Sea region have dominated sentiment.
Traders have been focusing on demand issues because the U.S. corn harvest is finished.
Argentina’s government was expected to approve an additional 2 to 3 million tonnes of corn for export in the 2010-11 marketing year later in the day, according to a senior agriculture official.
Last week, the South American country approved an additional 2.7 million tonnes of 2010/11 wheat for export, as favorable weather boosted early grain development.
Argentina is a major corn exporter and competes with the U.S. for business on the global market. A favorable export outlook could potentially weigh on demand for U.S. supplies, which is both the world’s largest corn producing nation and the world’s largest exporter of the grain.
Meanwhile, corn prices continued to come under pressure amid speculation demand from China will decline after the country’s National Bureau of Statistics said over the weekend that total corn output rose to 191.75 million metric tons in the current marketing season, up 8.2% from a year earlier.
The upbeat crop outlook in China, which is the world’s second biggest consumer of the grain, added to worries that the country would import less corn from the U.S. and increase its reliance on domestic supplies.
Agricultural commodities were also weighed after S&P said that it placed the sovereign ratings of 15 euro zone nations, including top rated Germany and France on watch for a possible downgrade, citing the region’s worsening debt crisis.
The ratings agency added that it plans to announce any ratings changes “as soon as possible” after Friday’s European Union summit.
Elsewhere on the Chicago Mercantile Exchange, wheat for March delivery fell 0.85% to trade at USD6.0550 a bushel, while soybeans for January delivery dipped 0.1% to trade at USD11.2525 a bushel.
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