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Several factors affect corn outlook
Iowa
News from the U.S. Department of Agriculture's Jan. 12 U.S. and world crop reports, as well as potentially increased corn plantings are likely to temper the normal seasonal strength in corn prices this winter and spring, according to Robert Wisner, Iowa State University (ISU) Extension economist. The USDA reports showed modestly larger U.S. and world feed grain estimates than indicated a month earlier.
Wisner said the larger supply points to modestly larger Aug. 31, 2005 U.S. corn carryover stocks than previously projected. At the same time, season-to-date U.S. corn export sales, at 10 percent below a year earlier, have fallen well behind early fall expectations. This combination has caused large outside piles of corn to disappear slowly, keeping post-harvest cash prices and basis from showing a sharp recovery.
Information from USDA's Jan. 12 grain stocks report indicated domestic corn feeding in the September-November quarter was about 2 percent above a year earlier. Official USDA projections call for a 4.8 percent increase for the marketing year, so news from the stocks report also was negative to the corn market in mid-January.
"Slightly increased feeding plus a strong uptrend in corn processing for ethanol will help absorb much of the huge 2005 U.S. corn crop," said Wisner. Even so, he expects that with lagging exports, the U.S. corn carryover stocks on Aug. 31 will be approximately 2.1 to 2.2 billion bushels, about a 10-week supply.
Wisner said the lagging corn export sales reflect the unusually large 12 percent estimated increase in global Wheat and 9 percent increase in global feed grain production. A sharp drop in the value of the U.S. dollar plus low corn prices normally would stimulate U.S. corn exports. But higher ocean freight rates and competition from foreign feed Wheat and feed grains have been offsetting factors.
"Both old and new-crop corn prices have a strong seasonal tendency to increase into the peak of the spring fieldwork season," said Wisner. "Mid-January conditions indicated modest strength in Iowa cash corn prices is probable, with a strong possibility of 8- to 12- cent higher prices in late April through early May than in mid-January. Additional strength probably would require serious weather concerns."
Wisner added that springtime strength in old and new-crop corn prices is likely to be tempered by concern that U.S. farmers will shift a significant amount of soybean acres to corn to reduce the risk of Asian rust.
Date: 1/26/05
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