US corn prices drop 25 percent as bumper crop looms; ethanol crush spread doubles since April

US corn prices have dropped nearly 25 percent and have reached a low of $3.35 for the July contract, creating a 41-cent per gallon “crush spread” for ethanol producers, up from 14.2 cents in April. The drop in corn prices follows an increase by the USDA in its corn and soybean planted acres report, released last week.

The USDA increased its corn acreage estimate to 87.035 million acres, and soybeans to 77.483 million acres. The 2009 corn acreage is the highest since 1946 except for the 2007 season, while soybean acreage is the highest on record. Investors are expecting that the July 10th World Agriculture Supply and Demand Estimates from the US will increase by up to 3.0 percent for corn and 2.1 percent for soy compared to the June report.

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