December 10, 2009

Corn prices expect to pick up next year on better demand

Corn prices are likely to rally in the first half of 2010, as demand is expected to pick up from current low levels, Rabobank said in a research report Wednesday (December 9).

Despite an estimated 2.7% rise in US corn acreage in the 2010-11 season, the expected increase in demand to a record high, as a result of stronger exports and higher ethanol use, will offset the increase in output, said Rabobank analysts Luke Chandler and Doug Whitehead in the report.

"Based on current expectations, US corn fundamentals indicate a bullish scenario for prices over the coming season," with the stocks-to-use ratio estimated to fall next year to its lowest level in a decade, said the report.

The average price of the Chicago Board of Trade corn futures in the first quarter of next year is forecast at US$4.00 a bushel, and US$4.20 in the second and third quarters, Rabobank said.

The CBOT December corn contract ended up US$0.75 to US$3.69 1/2 per bushel Tuesday. The average price in the fourth quarter this year is forecast at $3.80/bushel by Rabobank.