Corn stockpile sends prices lower, weather delays planting

As Eastern Iowa farmers have waited for the cool, wet weather to become warmer and drier, they've been watching the price of corn fall in recent weeks.

The corn market has dropped nearly $1 a bushel since the March 28 U.S. Department of Agriculture's grain stocks report that put March 1 corn stocks at 5.4 billion bushels. The inventory numbers were significantly higher than the expected 4.99 billion bushels reported by Bloomberg analysts.

Inventories were high due to reduced demand from the cattle industry. Many producers, faced with potentially high feed costs, culled their herds over the last year.

Farmers and investors also rushed to sell their holdings of last year's corn crop. By the end of that week, corn had fallen as low as $6.27 per bushel, the lowest price in over nine months.

When they do get into their fields, farmers are expected to plant the most corn acres since 1936, according to USDA forecasts. The prospect of a bumper corn crop in the fall also is depressing futures prices.

All that could change if the rainy spring weather delaying planting changes to summer drought as it did last year. Also, the margins for ethanol producers have reduced demand for corn and that could change if gasoline prices rebound.

Gasoline prices have been sliding as the price of crude has fallen and refinery operations have been increasing. U.S. refineries are running at 86.3 percent of capacity, the highest level since early January.

More refineries are coming online as gasoline producers stockpile supplies for the critical consumer vacation period between Memorial Day and Labor Day. A rebound in the price of crude and a sharper-than-expected drop in gasoline inventories likely would send prices at the pump higher.