Corn market factors push and pull, creating volatility

Corn Report
By Jason Sagebiel | April 01, 2013

Feb. 25—February brought volatility. Corn traded in a 60-cent range as weather improved in Argentina, exports waned and the investment community shifted money away from commodities and into equities. Scattered rain showers brought minor relief to Argentina’s corn crop. In February, the USDA lowered Argentina’s corn production estimate from 28 million metric tons (mmt) to 27 mmt; though it is still above last year’s 21 mmt. The USDA increased Brazil’s corn production by 1.5 mmt to 72.5 mmt. Overall world ending stocks have increased to 118.04 mmt from last month’s 115.99. Corn for export continues to decline, leading to an increase in the U.S. carryout. Export demand dropped by 50 million bushels to 900 million bushels, compared to the past two years at 1.543 billion and 1.834 billion bushels. Corn for ethanol demand remains unchanged at 4.5 billion bushels. Domestic demand continues to trump the market and should offer support until the new crop. The cash market remains firm on continued demand for corn for the feed and ethanol sectors, reflected in the cash market and the inversion of the corn spreads. In addition, the U.S. dollar index continues an uptrend, impacting corn. The market will be looking to the March 28 planting intentions for prospects of new crop potential. In the meantime, old crop supplies will continue to be perceived as tight, supporting the market, though as mentioned, managed money has been in liquidation mode since November.