Corn demand picture a moving target

Corn Report
By Jason Sagebiel | May 15, 2013

April 29—The corn market has been under pressure for most of the year as money exits agriculture type commodities. In addition, follow-through selling came as the USDA placed a bearish undertone in the March stocks report. However, the market will shift to the fundmental perspective. First, old crop supplies are tight or in tight hands reflected by the very firm basis levels exhibited throughout the U.S. Secondly, new crop prices will be under pressure with even below trend line yields but planting delays could cause some immediate concern.

Corn movement from the producer has been vitually nonexistent since the March stocks report. With lower prices, producers have been less excited about moving corn as their attention focuses on the next crop, therefore, cash markets have been historically tight. This should keep old crop supported at values observed in April.

With recent moisture, the new crop outlook is more optimistic but one would not assume trend line yields are achievable. With more acreage slated in areas that are historically less productive the national yield curve will see a drag. However, without a drought at the magnitude of last year, new crop production is much more promising this year. The demand picture will be a moving target and that will be determined by price throughout the 2013-’14 marketing campaign. New crop corn will hold $5.20 support levels until better yield prospects are more defined.