Corn prices peaked in August, moved sharply lower in
September, and have been in a sideways pattern over the past two months. Within
that sideways pattern, prices have moved higher over the past two weeks, with
March 2013 futures trading within $0.10 of the post-September high. The recent
rally has been fueled by some supply concerns and more optimism about near-term
demand.
There are two concerns about potential supply of corn in
2013. First, the on-going wet weather in Argentina may reduce the magnitude of
planted area of corn relative to intentions. Fewer acres would threaten the
projected rebound in production. The USDA has forecast the 2013 harvest at a
record 1.1 billion bushels, a third larger than the drought-reduced harvest of
earlier this year. The USDA will update the forecast in the monthly World
Agricultural Production report to be released on December 11, but a large
change in that forecast is not expected this early in the season. During last
year’s drought, the forecast of production was not reduced in December, but was
reduced sharply in January and again in February. The potential implications of
wet weather on acreage and yield are even more difficult to discern than the
implications of drought conditions. <Read More>
