Corn prices sank to a 3-1/2 month low as they extended their downward correction from last month’s all-time nearest-futures high of $7.9975 a bushel.
Bearish factors include:
- The USDA’s unexpected June 30 hike in its U.S. corn acreage estimate to 92.282 million acres, the second largest planted crop since 1944.
- Reduced corn demand by livestock producers that left quarterly U.S. corn inventories on June 1 at 3.67 billion bu, higher than estimates of 3.29 billion bu.
- The USDA’s May 11 cut in its 2012 U.S. corn export forecast to 1.8 billion bu, a nine-year low, as record high prices erode foreign demand.
Bullish factors include:
- A deterioration of the corn crop after the USDA’s weekly crop conditions showed the U.S. corn crop 68% good-to-excellent condition as of June 26, down two points from the prior week.
- The USDA’s June 9 cut in its 2011-12 U.S. carry-over estimate to a 15-year low 695 million bu. from a May estimate of 900 million, and the cut in its global corn carry-over estimate for 2011-12 to 111.89 MMT from a May estimate of 129.14 MMT.
- IGC’s prediction that global corn inventories will fall to 111 MMT in 2011/12, or about 13% of consumption, the smallest stocks-to-use ratio since 1974.
Weekly Corn Exports (week ended June 23): 655.2 MT; 2009/10 (September-August) cumulative exports are -4.7% y/y.
Fundamental outlook — Bull market correction — Corn prices plunged after the USDA raised its U.S. corn acreage estimates. Price declines may be limited, though, after the USDA cut its U.S. corn production and its carry-over estimates because of flooding. The 2011-12 corn stocks/use ratios are extremely tight with the U.S. stocks/use ratio at a record low of 5.2% and the world stocks/use ratio at a tight 12.8%.
Have a prosperous trading week.
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