However, the market remains in a bullish uptrend on external factors such as a weakening dollar and greater fund inflows.
Trade Eyes US Acreage Cut, Sub-1-Bln-Bushel Corn Carryout
The soggy spring and expectations of a shrinking U.S. 2009 corn crop are giving fundamental support to a Chicago Board of Trade corn futures market that already has strong outside support.
Traders and analysts generally say they expect total planted corn acreage to decline by at least one million acres from the U.S. Department of Agriculture’s March planting intentions estimate of 84.986 million acres. The government will release updated acreage numbers on June 30.
Add to the declining acreage outlook the possibility of lower-than-anticipated yields, which many analysts suggest is likely given the late start to the season, and corn prices have reason to climb, analysts say.
“Of all the grain markets, new-crop corn appears to have the most potential upside from current levels, with new-crop supply and demand balances appearing to be unreasonably tight given the current production risks,” Rabobank said in a monthly report.
American Farm Bureau Federation senior economist Terry Francl said in a report that many analysts think the net impact of the slower planting pace will be a two- to three-bushel-per-acre reduction in the national average corn yield.
Part of the bullish argument is that, based on the USDA’s demand projections in its May supply and demand report, a diminished crop would push 2009-10 ending stocks below one billion bushels. If that happened, it would be the first time since 2003-04 and only the second time in the past 14 years.
Source: CME News For Tomorrow