Corn prices are holding modestly above October’s 11-month low.
Bearish factors include:
- The prediction from Morgan Stanley that increased South American exports may curb demand for and cut 2011-12 U.S corn exports to 1.45 billion bu., below USDA estimates of 1.6 billion and the fewest in 26 years.
- Concern that the European debt crisis will crimp global economic growth and demand for commodities.
- Reduced corn demand by livestock producers which increased U.S. corn inventories on Sept. 1 to 1.128 billion bu., higher than estimates of 942 million bu.
Bullish factors include:
- The action by the IGC to cut its 2011-12 global corn production forecast to 853 MMT from a forecast last month of 855 MMT.
- USDA’s Nov. 9 cut in its U.S. corn production estimate for this year to 12.310 billion bu from 12.433 billion bu. forecast in October as it reduced its yield estimate to an eight-year low of 146.7 bushels per acre.
- USDA’s cut in its 2012 U.S. ending stocks estimate to 843 million bu and the cut in its 2012 global ending stocks estimate to a five-year low of 121.57 MMT.
Weekly corn exports (week ended Nov. 24): 810.3 MT; 2011/12 (September-August) cumulative exports –13.8% y/y.
Fundamental outlook — Medium-term bearish — Corn prices are attempting to recover from slack foreign demand, increased South American exports, and technical selling with the breakdown from the month-long trading range. Corn still has underlying support, however, from tight supplies after the USDA recently cut its U.S production estimate and its global ending-stocks estimate. The corn 2011-12 stocks/ use ratios are very tight with the U.S. at 6.7% and the world at 14.0%.
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