CBOT corn prices at three-month high after USDA cuts corn acreage estimates

New Delhi — Corn prices on the Chicago Board of Trade touched over three-month high on July 1, extending the price rally from June 30, when the US Department of Agriculture's acreage report showed a sharp reduction in US corn acreage from the previous estimates.

The most active September futures contract of corn on CBOT settled at $3.50/bushel on July 1, up 9 cents/bu from the previous trading day, and the highest after March-end.

The front-month July futures contract of corn also settled at an over three-month high of $3.48/bu on July 1.

The USDA in its acreage report estimated corn planted area in 2020-21 marketing year, which runs from September 2020 to August 2021, to be at 92 million acres. This was 5 million acres lower than planting intention numbers in March, and also sharply lower than average market expectations of 95.2 million acres.

Ethanol demand and dry weather in the corn-belt provided additional support to CBOT corn prices, Platts reported previously.

Ethanol production for the week ended June 26 was seen highest in three months at 900,000 b/d, according to the data from US Energy Information Administration.

Ethanol stocks for the week ended June 26 also fell to a near-three year low of 20.16 million barrels, suggesting a rise in consumption.

Corn prices take support from ethanol as nearly 40% of corn produced in the US goes into ethanol production.

Analysts said growing corn crop is vulnerable to hot and dry weather during the pollination period, which typically occurs between early to mid-July.

The forecast is of dry weather for that period raising concerns of damage.

"Above normal temperatures and below-normal precipitation is expected across much of the corn-belt during the first half of July," weather agency Maxar said.