Corn drops, soybeans rise after EPA sets biofuel targetsCHICAGO - U.S. corn futures fell on Friday and were on track for a second straight weekly decline after the U.S. government lowered its targets for ethanol blending and as corn export demand slumped for the crop harvested this autumn.
By: Karl Plume, Reuters
CHICAGO - U.S. corn futures fell on Friday and were on track for a second straight weekly decline after the U.S. government lowered its targets for ethanol blending and as corn export demand slumped for the crop harvested this autumn.
Soybeans rose about 1 percent, led by sharply higher soybean oil futures as the U.S. Environmental Protection Agency (EPA) raised its target for use of biodiesel, for which soyoil is a key feedstock.
U.S. wheat fell sharply to a two-week low on weak export prospects and as forecasts for drier weather in the southern Plains eased concern about crop damage.
The EPA on Friday unveiled much-anticipated targets for the blending of renewable fuels into motor fuel for the three years to 2016, trimming ethanol quotas for this year and next but raising targets for biomass-based diesel.
"There's some disappointment in the corn about the EPA numbers on ethanol. We're already producing ethanol at levels above the mandates so the trade is concerned that production would decline if corn prices rise," said Rich Nelson, chief strategist with Allendale Inc.
Limiting declines, however, was data released on Thursday that showed actual U.S. ethanol production was ahead of pace to reach the U.S. Department of Agriculture's forecast for this season, he added.
Chicago Board of Trade July corn fell 1-1/2 cents, or 0.4 percent, to $3.52 a bushel by 11:46 a.m. CDT (1646 GMT) and was on track for a 2 percent weekly decline and a third straight monthly drop.
CBOT July soybeans added 9-3/4 cents, or 1.1 percent, to $9.35-3/4 per bushel, fueled by a greater-than-4-percent jump in soyoil <0#BO:>. Soybeans were on pace for their first weekly gain in three weeks but prices were down month-on-month.
Expectations that a crusher strike in Argentina would be resolved kept a lid on soybean prices.
July soft red winter wheat fell 12 cents, or 2.5 percent, to a two-week low of $4.76-3/4 a bushel. July hard red winter wheat dropped 12 cents or 2.4 percent, to $4.98-1/4 a bushel.
Both markets were on course for weekly losses of 7 to 8 percent, among the steepest weekly declines since last August. However, both were also poised for a monthly gain after rallying earlier in May on risks of rain damage to U.S. wheat.
Analysts said evidence of yield losses in places such as Russia was needed to trigger further gains.