Corn prices are still strong, as old- and new-crop futures contracts remain at or near $5 per bushel. But market analysts say there are many factors that may pull prices up or down.
Wednesday’s USDA report placed ending stocks at 1.331 billion bushels, down from the March estimate of 1.456 billion bushels. Corn prices backed off a little, a sign Bryce Knorr, senior market analyst at Farm Futures, says “could mean the market is making an interim top, right on schedule with the long-term seasonal trend.
"Old-crop ending stocks could get tighter, but the main focus for corn now should be new crop. Both weather and acreage will be the factors to watch."
Knorr reports that corn closed slightly lower Friday (at $4.99), “pulled down by the drop in soybeans” and by forecasts that clear weather in parts of the Midwest will allow some spring planting.
Craig Turner, market analyst for Daniel’s Trading in Chicago, says $5 corn could face pressure from South America and other world production. “Before the report, exports were on pace to beat the USDA export expectations of 1.625 billion bushels,” he says. “USDA raised exports to 1.750 billion, which means we are now on pace to be below this estimate.
“USDA is giving the export industry some room for growth which could be difficult for $5 corn competing with South American and Ukraine corn.”
Ending stocks of 1.331 billion and a stocks-to-use ratio of 9.9% “does not imply a shortage,” Turner says. “We are now in the second half of the marketing year and the industry has a very good handle on expected demand from here on in. A year end carryout for 1.331 billion bushels is adequate and does not require price rationing.”
Old-crop corn “has adequate supplies and will be difficult to rally past $5.25 unless demand picks up another 100 or 200 million bushels, which is unlikely,” he says, noting that planting problems could boost old- and new-crop prices.
“New crop corn has potential to rally and drag old crop with it due to lower than expected acres, and potential weather and planting issues.”
Good demand for U.S. corn on the livestock feeding side should continue. But it could face pressure, as feedyards face a steady shortage of feeder cattle. “There are 5 million fewer fed cattle now than there were in 2000 (down from 30 million to 25 million),” says Randy Blach, CEO of CattleFax livestock analyst group.
In his remarks at the Texas and Southwestern Cattle Raisers Association convention last week in San Antonio, he indicates “more packing plants are closing.”
However, Blach notes that cattle producers are finally beginning to rebuild the national herd after severe drought. “I think we will expand the nation’s cowherd,” he says.