May 9, 2006

 

US corn prices move lower due to speedy planting

 

 

A report stating that more than half of the US corn crop have been planted has prompted markets to move lower last week. An earlier planting usually means higher yields, which depresses prices.

 

Furthermore, predominantly fair weather last week would have allowed more plantings.

 

Moisture conditions have improved in many areas that were dry heading into spring, holding promise of higher yields.

 

Buyers have seized on low corn prices to purchase 1.3 million tonnes, exceeding expectations.

 

Higher corn prices early this year did not stop foreign buyers, especially those from Asia. Analysts noted that with China putting a virtual halt on exports, Asian buyers are turning to the US as an alternative source.

 

Soy prices were much more unpredictable.

 

Soy plantings, at only 10 percent planted so far, would rev up as corn plantings wind down.

 

Analysts expect soy prices to be low for the next six months as a large crop is expected, barring any weather issues.

 

The likely shrinkage in Brazil's soy production due to low prices and farmers' protests provides some good news for US soy producers. Moreover, growing demand from China would provide further impetus for higher soy sales.

 

Soy meal sales was at 126,500 tonnes, 33 percent above expectations.