How Far Can Corn Go?

This trading week started just as it ended last week; with a bang. On Sunday night, corn futures prices advanced near the limit price of 45 cents or close to it for most of the night. It would have been one for the record books if corn had stayed limit up throughout the trading day Monday, since the daily limit for corn futures would have been 60 cents on Tuesday.

DECEMBER CORN FUTURES - DAILY

Chart provided by APEX

However, corn still made a new 2-year high of 588 on Wednesday. This was due to an extremely bullish USDA report last Friday morning. The USDA pegged the corn bpa at 155.8 and production at 12.664 billion bushels. Trade expectations were much higher at 160 bpa and production to be at 12.95. The number that has the biggest potential price impact on the market down the road is 2010/11 corn ending stocks. The USDA pegged it at just 902 million bushels, compared with trade expectations near 1.116 billion bushels. This is the fifth consecutive month that ending corn stocks have decreased. This results in a stocks/usage number of 6.7%, which is the second lowest in history, next to the 5% back in 1995/96. Global ending stocks for corn were also down by about 3 million tonnes from last month to 132.36 million tonnes. Due to the Columbus Day holiday on Monday, the USDA gave us our weekly export inspections Tuesday morning, which came in at 30.7 million bushels. This is down from 37.8 million bushels last week. The trade was looking for a range of 30-34 million.

Crop progress came out Tuesday after the close. The U.S. corn harvest came in at a record pace of 51% complete. This is well above last year's mark of 13% and above the 10-year average of 34%. With the weather being ideal for harvesting last week, this might have been a little lower than expected due to farmers concentrating on soybeans and waiting for their corn to dry. The key number this week will be tomorrow's weekly export sales report. The trade is looking for a potentially large corn export number tomorrow of between 1.5-1.8 million bushels, which will give additional support to the corn market. (more)