March 18, 2014
Global corn prices up on bullish tone
World's corn prices could go virtually any direction at about any time attributable to the crisis in Ukraine, China's stockpiling of corn, and potential for good US growing conditions.
And with December 2014 futures prices above US$189 per tonne, getting a few tonnes priced now could provide protection against the threat of prices US$1 or more below that this fall, says Ed Usset, University of Minnesota grain marketing economist.
He adds that new-crop corn quotes are below production costs for many producers.
USDA's World Agricultural Supply and Demand Estimates (WASDE) report on March 10 saw US corn ending stocks lowered 635,000 tonnes and the average price is narrowed to US$167-187. Internationally, higher corn production is being seen in China.
"At the same time, China continues to reject corn shipments from the US containing an unapproved genetically modified organisms (GMO) trait, but that corn appears to be finding a home quickly from other buyers around the world," reports Farm Futures, sister publication to Corn+Soy Digest.
China, in the meantime, continues to stockpile corn to support prices for its own farmers, giving feedmills incentives to keep pushing for increases in import quotas.
Farm Futures adds that there remains uncertainty whether farmers in Ukraine will be able to seed this year's crop due to problems with financing. "Rallies on international disputes rarely result in a sustained change to supply and demand fundamentals," it reports. "But the bullish tone to the (US futures) market should be respected.
"Keep selling old-crop inventory and use the rally to make initial sales of 2014 production. Buying 85% of trend-adjusted yield for Revenue Protection and participating in the new Agriculture Risk Coverage programme should go a long way towards guaranteeing a profit in the year ahead."
Usset says that with El Niño in the forecast and the chance for a good growing season in the Corn Belt, price risk management is needed.