Reserves dip to 15-year low
ST. LOUIS (AP) -- Rising demand for corn from ethanol producers is pushing U.S. reserves to the lowest point in 15 years, a trend that could lead to higher grain and food prices.
The Agriculture Department on April 8 left its estimate for corn reserves unchanged from the previous month. Reserves are projected to fall to 675 million bushels in late August, when the harvest begins, or roughly 5 percent of all corn consumed in the U.S. That would be the lowest surplus level since 1996.
The limited supply is chiefly because of increasing demand from ethanol makers, which rose 1 percent to 5 billion bushels. That's about 40 percent of the total crop.
But the increase didn't alter the agency's overall estimate, mostly because livestock producers are expected to scale back their corn purchases.
The Agriculture Department estimated that demand from livestock producers fell 1 percent to 5.15 billion bushels.
Derivatives OK'd for some
WASHINGTON (AP) -- Companies that trade derivatives solely to guard against volatile price swings won't have to meet new federal collateral requirements.
The Commodity Futures Trading Commission advanced the exemption April 12 as part of new regulations for derivatives, investments whose value depends on the future price of some other investment.
The rules, which were included in last year's financial regulatory law, require banks and businesses that trade derivatives to put up millions of dollars to cover their losses. The aim is to cut down on the kind of risky trades that contributed to the 2008 financial crisis.
But airlines, oil companies and farmers are among hundreds of businesses that won't be required to do so, if they use derivatives to control unforeseeable costs, such as extreme weather that damages crops.
One challenge is figuring out who qualifies for the exemption. Some businesses, like international food company Cargill Inc., trade derivatives both to hedge against price swings and also to speculate for financial gain. That highlights a challenge for regulators, who are still working through the parameters of the exemption.
Foreign sales drop for U.S. firms
WASHINGTON (AP) -- U.S. companies sold fewer products overseas in February but the trade deficit narrowed because of a big decline in oil imports.
The trade deficit fell 2.6 percent to $45.8 billion in February, the Commerce Department reported Tuesday.
Exports, which had hit an all-time high in January, edged down 1.4 percent to $165.1 billion. Sales of U.S. autos, industrial machinery and food products all dropped.
Imports fell 1.7 percent to $210.9 billion. A big reason for the decline was that demand for crude oil fell to a 12-year low, which offset higher prices. The United States also imported fewer cars and computers.
Sales of U.S. farm products fell $160 million, reflecting declines in sales of oilseeds, animal feed and soybeans. Sales of corn were up, reflecting higher prices on world markets.