September 19, 2008

US corn prices will enjoy a boost in the future from rival Argentina's decision on Thursday (September 19, 2008) to stop exporting corn, but for now the impact is trumped by turmoil in the financial markets.

Even news of the world's No. 2 corn exporter closing its corn export registry failed to boost corn prices as futures at CBOT were down by the daily trading limit of 30 cents a bushel, a fall of 5 percent.

CBOT corn futures prices had plunged by roughly 4 percent near midday on Thursday despite a broad consensus early in the day that markets would be higher as they took direction from soaring gold, rallying crude oil and a weaker trend for the US dollar.

However, those markets went on a roller coaster ride too and the crude oil rally had ended by the time the US corn trading session opened on Thursday.

Argentina's role as a supplier of feed for the globe's livestock and poultry sector is significant- USDA last week forecasted Argentina's corn exports for the 2007/08 marketing year to total 15.0 million tonnes, 24 percent of the US exports of 61.6 million and well above the world's No. 3 exporter, South Africa, with only 1.5 million tonnes.

Total global corn exports are forecast by the USDA to total 86.83 million tonnes.

Traders and analysts on Thursday agreed that it was significant that Argentina was halting corn exports but also conceded that, the corn futures market is firmly in the grip of possibly the biggest meltdown of financial institutions in history.

Corn is currently abundant in the US, but prices are down because crude oil and the rest of the market is backing down because of the financial turmoil.