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Corn Market Overview

19 June 12:29 PM

Futures news, corn. USDA report, issued on June 12, cast short-term pressure on corn market.

Analysts were expecting ending stocks of corn to reduce this season. However, for the USA they remained unchanged, and world stocks have risen by 1.26% due to reconsidered volume in the PRC (2 mln. tons more) and Brazil (1 mln. tons more).

According to the latest data of US Ministry of Agriculture, in 2012-13 MY world corn production will rise by 4.2 mln. tons due to higher yield in China (by 2 mln. tons), ЕС (by 1.1 mln. tons) and CIS countries.

This season price range has remained the same – $5.95 - $6.25 per bushel, and the price range for the following season has been defined as $4.20 - $5.00 per bushel.

Report has generally proved to be positive, which has immediately resulted into short-term market correction downwards.

However, afterwards futures prices have gone up.

A number of US states are to face certain threats to corn yield. To be more exact, according to forecast, the weather in Illinois, Missouri, and Iowa is going to be dry and rainless during the nearest weeks. Let us remind that the weather during next 15 days will be determinant for further development of seeds, as the period of late June-early July is the peak of blossom.

At this point, 66% of corn seeds are in good or excellent condition, which is less than last week when this number amounted to 72%.

According to Commodity Trading Department of Masterforex-V Academy, the price of old corn yield is influenced by the following bullish factors:
(1) corn stocks are at the point of the 8-year low,
(2) low corn stocks-use ratio in the USA in 2011-12, which amounts to 6.3%, whereas world ratio amounts to в 14.7%.
(3) Drought in South America, which may have negative impact on yield in Argentina (this year’s yield is predicted to amount to 21.5 mln. tons, whereas last year it was 23.6 mln. tons).

Price of new corn yield is influenced by the following bearish factors:
(1) earlier spring planting, which will rise the yield capacity to 166 bushels per acre,
(2) USDA forecast, according to which this year’s corn seeds may rise by 9.3%, thus becoming the highest point since 1937. This fact may influence ending stocks, which are most likely to rise to 1.881 bln. bushels from 801 mln.
(3) Corn stocks-use ratio in the USA, which will amount to 13.7% in 2012/13 yy.

According to seasonal trend, at this point historical price drop may start due to the expectation of new yield.

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