Grain Prices Fall on Fewer Supply Worries

Grain prices fell Thursday after a government report eased concerns about shortages later this year.

The U.S. Department of Agriculture predicted that corn and soybean reserves will be higher than initially estimated, forecasting there will be about 123.1 million metric tons of corn left over after this year's harvest. That's up from an estimated 122.5 metric tons in last month's report. There should be about 58.3 million metric tons of soybeans left over, compared with last month's estimate of 58.2 million.
Corn for May delivery dropped 18.25 cents to $6.8275 a bushel. Wheat also fell 18.25 cents to $7.405 a bushel. Soybeans rose 6.5 cents to $13.555 a bushel.
Lower reserves caused global grain prices to double this year. Corn was trading for just $3.50 a bushel as recently as this summer. But growing demand from ethanol producers and consumers in developing countries like China has stripped supplies. The government predicts corn reserves this year will be at their lowest level in 15 years.

The longer-term trend for corn and soybeans will probably be higher, Sanow said, because global demand remains strong. But in the near-term, the recent run-up in prices is likely to ebb.
The government estimates that food prices could rise more than 3 percent this year as processed food makers and grocery stores pass along higher costs for raw ingredients. Still, crops like corn and soybeans account for just 10 percent of the raw ingredients used in processed foods. So it can take months for higher prices to reach consumers.
Oil prices fell Thursday on weak economic news from the U.S. and China, but regained some of their losses on reports from Saudi Arabia that police had fired on demonstrators.
Oil fell as low as $100.62 Thursday morning, the lowest price in a week. The reaction to the Saudi development shows how sensitive the market is to news from the Middle East. Oil prices soared above $100 per barrel last week as an uprising in Libya essentially shut down the country's exports.

Earlier in the day, economists were warning that the recent surge in fuel prices will eventually slow economic growth.
The economic news helped cause the earlier oil sell-off. China, which is expected to drive oil demand for years to come, reported overnight that surging oil and commodity prices produced a surprising trade deficit of $7.3 billion for February. The U.S. Labor Department reported that the number of people seeking unemployment benefits rose far more than analysts had expected last week.

The U.S. dollar also gained against other major currencies. Oil, which is priced in dollars, tends to fall as the dollar rises and makes oil more expensive for buyers holding foreign currency.
Benchmark West Texas Intermediate crude for April delivery lost $1.68 to settle at $102.70 a barrel on the New York Mercantile Exchange.
In other Nymex trading for April contracts, heating oil fell 2.58 cents to settle at $3.0449 a gallon, gasoline lost 0.76 cents to $3.0196 a gallon and natural gas fell 10 cents to $3.83 per 1,000 cubic feet.

In metals trading, copper for May delivery fell 1.5 cents to settle at $4.1845 per pound.
In April contracts, gold fell $17.10 to settle at $1,412.50 an ounce and platinum gave up $36.40 to $1,765.60 an ounce. May silver lost 98.1 cents to settle at $35.066 an ounce and June palladium fell $15.25 to $766.40 an ounce.