March 23, 2005

US corn prices rise and kept out of spring rally

US corn has not experienced the same spring rally as wheat and soybean but a large supply, and global surplus is keeping its prices in check.

Throughout February, November soybean futures rallied almost a $1/bushel while December corn futures gained only about 15 cents/bushel.

"In my opinion, the one commodity that probably has the most potential is corn, but I think new crop corn futures are not even to a level where I would start making sales," said Jensen. "I'm still targeting $2.50 December, and we haven't even reached that yet."

The United States produced a huge 11 billion bushel corn crop in 2004 but conditions this year would mean such a large crop would not be seen for at least two years. Domestic feed and ethanol demand for corn remains strong, but the Chicago Board of Trade (CBOT) funds are not that interested in corn due to traders' lack of response.

"What we need to do is find a price level where our export sales can begin to pick up," said Jensen. "At this point, we haven't found that yet."

Cumulative export sales from last September through Feb. 17, 2005 were 12 percent below a year ago. Part of the reason is due to ample supplies of feed wheat throughout the world.