June 17 (Bloomberg) -- Corn rebounded after falling to a three-week low on speculation that ethanol producers won’t reduce purchases of the grain after the U.S. Senate voted to repeal industry tax incentives.
The U.S. Senate yesterday voted to eliminate the 45-cent tax credit for refiners on each gallon of ethanol mixed with gasoline and ended a 54-cent tariff on Brazilian imports. Under an energy law known as the Renewable Fuels Standards, petroleum refiners are still required to use 15 billion gallons of ethanol by 2015.
“There has been no change in the mandated higher uptake of ethanol set out in the Renewable Fuels Standard and so corn use for domestic biofuel will stay strong,” said Justine White, an analyst at VM Group in London. “The change in the subsidy regime should not translate into immediate demand destruction for corn from the ethanol sector.”
Corn futures for December delivery gained 7.5 cents, or 1.2 percent, to $6.605 a bushel by 1:15 p.m. London time on the Chicago Board of Trade. The price earlier touched $6.4775, the lowest for the most-active contract since March 17.
Lower prices also may have encouraged users of the grain including exporters and animal feeders to purchase supplies, White said.
“The dip also prompted some physical buying of corn for feed as feed producers in Asia need to start booking their supplies for September,” White said.
Wheat for September-delivery gained 5.75 cents, or 0.8 percent, to $7.14 a bushel. The price earlier dropped to $6.9625, the lowest since March 17. Milling wheat for November delivery dropped 2 euros, or 0.9 percent, to 214 euros ($305.27) a metric ton, after earlier reaching 210.50, also the lowest since March 17.
Soybeans for November-delivery gained 3.5 cents, or 0.3 percent, to $13.5375 a bushel, set for a 2 percent decline this week. The price has declined 3.5 percent this year, partly on speculation Chinese demand will fall.
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