Is the rationing process working for corn?

Focus on Futures: Corn

We’ve used the term “abysmal” — or the like — to describe U.S. export sales for the 2012-13 marketing year, and we’re running out of adjectives. Over the past two months, the combined weekly readings for the current and next marketing year have been close to zero. To reach even the USDA’s rather low forecast of 29 million tonnes for the year, average weekly commitments would need to be in the 500,000 to 600,000 tonne range.

Year-to-date commitments stand at 12.77 million tonnes, down 49% from last year at this time, and are at their lowest level for this time of year since the USDA started keeping track in 1987!

Traders have watched incredulously every Thursday morning as the USDA weekly commitments report has continued to show almost no overseas sales, but reasoned that foreign customers were still recovering from sticker shock and but would return sooner or later. Prices have fallen by as much as $1.50 per bushel since they peaked in the summer, but there is still nothing happening.

While the silence on the U.S. export front in itself would seem to be a clear indication that the rationing process is working by curtailing demand, the market’s reaction to a slew of USDA data on Jan. 11 actually sparked a rally.

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