After breaking below the local low at $432 per bushel, the price of the corn futures for December delivery is trading within a tight range. Even a strong rally seen in the wheat market on October 18th failed to support corn futures.
What are the current tendencies driving the market? Why is corn still devaluing? Let’s ask the Commodity Trading Department of Masterforex-V Academy.
Corn Futures Prospects
As far as mid-term perspective is concerned, the market of corn is likely to remain under the pressure caused by the excessive corn yields in the USA and other major corn-exporting countries, which led to oversupply. This pressure will last at least until the harvesting campaign is over. This what the experts think on the matter. The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of corn:
Traders on Global Tendencies
Apparently, the USA is the world’s number one in terms of corn production and export. The US harvesting campaign is still underway. According to Reuters, 31% of the crops is harvested as of October 13th. This time last year, the figures were around 79%. Apparently, there is a major delay in the harvesting process.
Corn prices are supported by the expectation that China may well increase the import of corn amid the 2014 draft budget issue in the USA. Previously, we reported about the fact that the USA bought some 420K tons of corn to China. Actually, the delivery will take place in early 2014. Meanwhile, private Chinese imports of corn have reached 600K tons this year.
These factors support the international market of corn. The following factors expert pressure on the market:
The expected record-high harvest of corn in the USA is definitely putting some pressure on corn futures. Another major factor to consider is the fact that the US government is set to cut down on ethanol production, which will spare some extra volume of corn, thereby increasing the overall market supply.
A range of agencies has upgraded their corn production forecast. Some of them expect the corn yield to increase from 13,483 up to 13,708 billion bushels this season since the crop capacity turns out to be higher than expected.
