Corn prices stopped growing earlier this week. The major bearish factor is the US government’s statement about a decline in the domestic consumption of ethanol (corn is used to produce ethanol). This is a positive sign for livestock breeders as their fodder expenses will decline. However, the severest drought in 56 years will most likely result in corn production cuts in the 2012-2013 marketing year.
Most US states finally saw some rain a couple of days ago. However, experts say that those rains have failed to improve the quality of the corn harvest. There was hail in some US regions, which could only spoil the harvest.
According to the latest report published by the USDA, the amount of crops in good and perfect condition has declined by 1% and 23% (it matches the forecast).
Obviously, unfavorable weather damaged multiple crops around the globe.
On August 10th, the USDA published its forecast for the US and global production of corn. It is obviously bearish in all the aspects (see the chart below).
According to the Commodity Trading Department of , the overall bias for the next season is bearish (it holds true for the entire global market and the US one). We will probably see a major deficit despite the mentioned consumption decline.
