Ethanol cutbacks keep pressure on corn prices

Corn futures continue to flirt with contract lows as ethanol producers curb production amid tumbling oil prices.

May corn futures fell by 2¢/bushel today toclose at $3.42/bushel, about 2pc above the contract low reached on 18 March, and they are poised for further price headwinds as demand from ethanol producers wanes.

Traders today said ethanol producers have curtailed output to mitigate losses stemming from plunging oil prices. Ethanol producer margins fell further into the red after oil prices plunged following the breakdown in the Opec+ supply negotiations earlier this month.

Depreciating futures extended beyond May and dragged December-crop corn prices to a contract low last week, too. December futures today closed at $3.63/bushel, up by 1pc from the contract low on 18 May.

Sinking new-crop corn futures against firmer soybean values could impact this season's crop mixes for farmers still weighing options.

The soybean-to-corn ratio inched up to 2.39 as corn prices fell and soybeans for November delivery rose, fueled by talks of delays at South American ports. The port of Santos in Brazil – the primary port for the country's soybean exports – continues to maintain normal operations by deadline.

A ratio above 2.35 favors more soybean acres, but the metric is a gauge of sentiment and does not quantify area.

By Connor Hyde