April 30, 2010

Corn futures on the CBOT may fall below US$3.30 a bushel in the next two months as plantings continue to improve, an industry analyst said Thursday (Apr 29).

"Prices can easily go down by US$0.20-US$0.30 because current indications are that the US is heading for a record corn crop this year," Jay O'Neil, senior agricultural economist, said on a conference organised by the American Soy Association.

"The continuity of the price falls will depend on the condition of the US corn crop by July or August," he said.

The current progress in corn plantings indicate the US may reap a record corn harvest of around 333 million tonnes this year, up from 307 million tonnes in 2009. The previous record was the 331.2 million tonnes produced in 2008.

O'Neil said the demand for corn from the ethanol sector rose to 93 million tonnes in 2009, nearly tripling from just 34 million tonnes in 2005. That is projected to rise further to 109 million tonnes this year.

"O'Neil said the increase in US production this year will mainly be on account of timely sowing and higher yields; though an expected marginal increase in acreage will also help. Corn yields this year are projected around 10.35 tonnes per hectare, up from 9.66 tonnes per hectare in 2009, and there are indications that yields may exceed current projections," he added.

"According to current estimates, 75%-80% of the plantings may be completed by early next week in favourable weather conditions," he said.

"Ideally, 80%-85% of the area should be planted by May 15, but the progress has been faster this year," he noted. The US has traditionally around 1.3 million-1.4 million hectares of swing area which can be shifted to soy if corn plantings don't take place on time.