The Rising Influence of Rising Affluence

[DewDiligence]

(DE)—Corn prices are down sharply from 2012 high due to expectation of largest-ever US harvest:

http://online.wsj.com/article/SB10001424127887323446404579006594160246998.html

On Friday, corn traded in the futures market for slightly more than $4.65 a bushel, down from $8.31 a bushel last August. (Prices for soybeans, the U.S.'s second-biggest crop, are down more than 20% from a year ago.)

… Corn prices hovered at less than $2.50 a bushel for most of the past decade. Prices surged in 2008 because of flooding and growing demand by the ethanol industry. The recession knocked prices back down, but they rebounded even more strongly, fueled by foreign markets such as China and a drought that crimped supplies. Prices largely have stayed above $6 a bushel in the past two years.

The Department of Agriculture has projected this year's U.S. corn harvest, which starts next month, to haul in about 14 billion bushels, up from 10.8 billion bushels last year and 12.4 billion bushels in 2011. Officials are expected to increase the estimate slightly in a monthly crop report due Monday.

…U.S. corn exports have fallen to levels not seen in decades as competition from South America and elsewhere increases. And runaway growth in U.S. ethanol production is easing as the corn-based fuel supplement hits limits on how much can be blended into gasoline.

Low corn prices are probably the main reason DE has underperformed the market lately despite putting up excellent sales and earnings numbers. DE reports FY3Q13 results on Wednesday.