By Bryan Doherty

Stewart-Peterson Inc. Market Analyst

07/09/2010

Last week's Stocks and Acreage Reports had major surprises for the corn market. Stocks were reduced to 300 million bushels and acreage down approximately 1.5 million from expectations. This was no small surprise, and caught the market off guard after moving downward over 40 cents in the previous week. With an evaporation of over 500 million bushels, 300 million in stocks and 200 million in production, the bearish tide has changed.

The next question of course, "Is the low in?" If weekly crop conditions reported by the USDA remain favorable and timely rains fall where needed, other areas dry out, it is still possible that the US could raise a record yield. However, we think the door is quickly closing on this scenario, as it looks likely that the 10 percent of the crop rated either poor or very poor will have little chance of improving to boost crop yields. Therefore, the report, along with another bout of wet weather this week, are increasing the odds that the low for corn prices is in. We have been indicating that we think corn can move down to $3 with a big crop. We are now changing that thought.

The next two months will be critical, as weather will dictate corn prices in the US and abroad, especially China. China came up short in inventory last year due to a smaller-than-needed crop. If they have a repeat again this year of losing 10 to 20 metric tons of corn, it could mean a substantial increase in US corn exports to China. This could put corn prices well into the $5 range.

If you have comments, questions or suggestions, contact Bryan Doherty at 1-800-Top-Farm, Ext. 129.

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