Recent USDA projections for a larger U.S. corn crop also came with projections for increased global demand, says Chad Hart, Iowa State University agricultural economist. As a result, the outlook for future corn prices remains steady with a chance for improvement.
“Up until last week, we were on a record corn-planting pace and USDA took that into account in its latest supply and demand reports,” says Hart. “USDA now projects U.S. corn yields to average 163.5 bu./acre in 2010, or about 2½ bu./acre more than the yearly trend increase, which would be 160.9 bu./acre.”
Despite the increased expectations for a boost in corn production, USDA’s recent supply and demand reports aren’t necessarily bearish, adds Hart. “USDA is now projecting increases in demand for ethanol, high-fructose corn syrup and corn for export for the next couple years,” he points out.
For old-crop corn, the market is also watching carefully for more action from China, relates Hart. “Recently, we’ve seen one small sale to China, and if they come in a little stronger with some more corn purchases, prices could move back up,” he says. “The last time China was a net importer of corn was in 1995, when they made several purchases in June, July and August. This could be the year when that happens again.”
For new-crop corn, the market outlook remains mixed, however. “Worldwide, there is a fairly strong corn production forecast,” says Hart. “So, there is an expectation for higher production both in the U.S. and in the rest of the world. On the other hand, the demand is strong enough to soak up just about as much corn as we can supply.”
USDA’s projected average price for 2010 corn is down only a dime, from $3.60/bu. to $3.50/bu., compared to 2009 corn, points out Hart. “For 2010 corn markets, we’ll be looking to see if there is any chance for weather concerns to develop that might impact market prices,” he says. “With the demand for corn as high as it is now, if you pull production down anywhere worldwide, there’s a good chance prices will head back up. Also, if any other country comes up short in production, the U.S. is the country most likely to benefit.”
For more information on corn markets, visit the following Web link: http://cornandsoybeandigest.com/marketing/.