Big supply pressures corn prices
As the 2006 harvest gains momentum, corn supply from Sept to the Jan annual report has grown 90% of the past ten years.cted to continue to press futures lower. However, strong domestic and export demand and extremely tight world stocks of corn and wheat may not keep the falls low from consolidating very long before an anticipated explosive first 4-5 months of 2007.
Historical Price Trend: As the page had suggested last Friday, 100% of the time for this week over the past ten years, corn finished an ave of 10 cents lower. This week did finish lower by five and one quarter cents. Next weeks odds are 70% lower.
Weekly Export Sales: 2006-07 corn export sales have already have reached 22% of USDA's export target vs 17% for the five year ave. The 2006-07 marketing year have found corn sales reaching 496 million bushels vs last years 310 mil bu and a previous three yr ave of 303 mil bu. China remains out of the export picture. Its first 8 mths of 2006 have limited export sales to a mere 2 MMT, down 65% vs the first 8 mths of 2005.
Argentina: the USA's #1 corn export competitor is Argentina. They are planting and scheduled for harvest beginning in March. Estimates released Thursday a corn crop of 17.78 MMT vs last years 14.5 MMT. Yes that is how the world can respond to high prices, with enthusiasm.
Corn End Stocks to Use: Projected end stocks to use now at 10.2% vs 9.4% in 2003 for the domestic situation. Globally a level of 11.5% vs 2003's 14.3%. Projected world end stocks for 2006-07 now 92 MMT vs 103 in 2003! Lets go back to 1983 to find smaller stocks of 89 MMT!
Cash Corn: it is the March-April time period when the National corn price average more often than not finds its calendar year peak price dating back to 1998. For the end user it is more often in the Oct-Nov time frame when prices reach low levels to lock in long term needs. Feel free to contact your Allendale representative to discuss your cash corn marketing plan as an end user or producer.
LDP: details presented in Wednesday's Allendale Wrap-Up concluded both the 6 and 7 year LDP average peak for corn has been Oct 11th while soybeans finds its peak in a range of Oct 14th through the 27th. You will find the complete table just before the soybean comments.
Five Year Ave Cash Price: the five year ave cash price for corn for the month of Sept $2.13, month of Oct $2.05, month of Dec $2.11.
Corn Technicals: Dec futures close is 2416 vs last Friday's 2460. Our key custom Moving Averages are 2410, 2420 and uses a 2580 bear to bull pivot point. March futures close is 2554 vs last Friday's 2600. Our key custom Moving Averages are 2560, 2560 and a 2670 bear to bull pivot point.
Trade Position: We remain short both Dec and March corn futures based on new crop harvest seasonal tendencies, heavy old crop stocks. However we remain long term very bullish from a yet to arrive projected Oct July futures low into a late winter, early spring high based on our research in years when projected global and stocks to use are abnormally tight.