Following wide swings in September and early October, the prices of corn, soybeans, and wheat have traded in relatively narrow ranges in the last half of October. Narrow trading ranges reflect the lack of new information and, in some cases, conflicting demand indicators.
Since October 12, December 2011 corn futures have traded in a range of about $.40, with a high near $6.65. That contract is now about $1.40 below the late August high. Basis levels remain generally strong and are at record levels for this time of year in some markets. Demand news tends to be mixed for corn. Ethanol production since September 1 has been near the level of a year ago, suggesting corn consumption in that market remains at record levels. Spot market margins for ethanol producers have increased sharply since reaching record low levels in June. Calculated margins are near the highs reached in 2007. Declining corn prices and higher ethanol prices have both contributed to the improved margins. Ethanol production looks to be large for the next two months, with more uncertainty in 2012 after the blender’s tax credit expires. <Read More>
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