March 2013 corn futures dropped below $5.50 in early May 2012
and were drifting lower when U.S. drought conditions turned prices higher
starting in mid-June. The price of that contract peaked in early August, just
short of the $8.50 mark. March 2013 soybean futures dropped below $11.50 in
December 2011before South American drought conditions and then U.S. drought
conditions sent that contract above $17.25 by mid-September 2012.
Corn prices have declined by more than $1.00 since the late
summer peak, while soybean prices have declined by more than $3.00. The general
expectation has been that prices of both commodities would return to pre-drought
levels as early as 2013 as consumption adjusted to the lower supplies and as
production rebounded in both South America and the U.S. The futures market
currently reflects expectations that corn prices will moderate substantially
from current levels by the fall of 2013 as larger crops are harvested in
Argentina and then in the U.S. December 2013 futures, for example, are priced
$.95 below December 2012 futures. The soybean market expects prices to moderate
from current levels by the summer of 2013 as a large South American crop is
harvested. August 2013 futures prices are nearly $.60 lower than March 2013
prices. Further price reductions are expected into the fall of 2013 as a larger
U.S. crop is harvested. November 2013 futures are about $0.85 below the price
of August 2013 futures. Still, the prices of both commodities for delivery in
the 2013-14 marketing year are well above the levels prior to the drought of
2012. <Read More>
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