High corn cost fails to reduce demand
U.S. corn stockpiles shrank far more than expected this summer as near record-high prices have not significantly reduced demand. A recent USDA report reignited a rally in grain prices sending corn futures higher after a period of easing.
The USDA's ending-stock figures showed that that the high corn prices during the quarter had failed to reduce demand as analysts expected, suggesting that prices may need to rise in the coming months for livestock feed and ethanol, according to Reuters. The report showed 988 million bushels of corn on hand.
“The lower stocks estimate was driven by larger than expected feed and residual use during the June-August period,” said Marty Foreman, Doane senior economist. “While feed use was higher than expected for the quarter, it was still historically quite low.”
Trader’s attention now shifts to anticipation of the next report from USDA due Oct. 11. “We look for USDA to boost their 2011/2012 feed and residual estimate when they update supply and demand,” Foreman says.
In addition, corn-based ethanol production will likely keep up the pressure on prices. “Corn for ethanol is running above the pace implied by current USDA forecasts,” Foreman says. Longer-term, he expects the emphasis to shift from the supply side to the demand side so the corn grind for ethanol will be key.
Foreman also anticipates a reduction in the USDA’s next corn production estimate. “We expect USDA to lower their estimated corn production to 10.43 billion bushels, down from 10.727 billion currently,” he says.
Foreman believes corn’s August price highs ($8.50 December futures) are probably in place, with the downside probably limited to near $7.00 – the recent low. “Expect prices to hold mostly from $7.40 to $7.80 per bushel for the next 30 to 60 days.”
Corn futures surged nearly 6 percent on Friday when the USDA reported corn stocks as of Sept. 1 were below 1 billion bushels for the first time in eight years. Wheat futures also rose more than 5 percent, topping $9 per bushel after the data showed stockpiles were 7 percent less than forecast.
Self-contained hydraulic system with power cables (hydraulic). Tandem Henschen axles (hydraulic). Hydraulic fenders. Manual or hydraulic tilt. 6,500-gallon tank.
- Avoid contaminating seed super boxes in handling
- U.N. warns food security a risk to Asia-Pacific
- Ag markets ended Tuesday in mixed fashion once again.
- Vietnam cuts rice export price floor, eyes Manila tender
- Ag markets turned decidedly mixed Tuesday morning
- Calculations for March 1 corn stocks estimate
- Are you in favor of a federal labeling standard for food that might contain genetically modified ingredients?
- Commentary: Barking up the wrong tree
- Larson Electronics offers 150 Watt LED high bay light fixture
- Julie Borlaug says biotech is necessary in fight against hunger
- Water allocation for most drought-stricken Calif. farms to end
- CLA responds to EPA’s proposed worker protection standard
R&R Minuteman Blend System
R&R Manufacturing Inc.