Corn prices plummet, Corn (from page 1)

Cattle Market & Farm Reports, Editorials
Dec 3, 2008
Corn prices plummet

Corn (from page 1)

to be end-of-the-month or end-of-the-quarter activity. If so, selling interest from this group could begin to slow,” said DTN analysts last week. “However, the combination of a continued downtrend and bearish underlying fundamentals gives the market a bearish structure and could be pointing to target prices well below Tuesday’s (Sept. 30) close despite seasonal tendencies that begin to turn more bullish in early October. Maintain the strategy of buying cash on an as needed basis.

Long-term purchases will be made when the market indicates a possible change toward an uptrend.” That uptrend may come as a result of the acreage battle between corn and soybeans resuming earlier than normal this year, according to University of Nebraska-Lincoln Agricultural Economist Darrell Mark, who pointed out that the current pricing of corn would make it difficult for the 2009 corn crop to reach the needed acreage to fulfill demand, leading to higher prices soon. “The competition for acreage seems to begin earlier every year. While some believe the 2009 battle for acreage has been going for a couple of months now, it is likely to begin in earnest when harvest reports on the

2008 crop start rolling in over the next few weeks,” Mark said. “If we see moderate or low corn yield reports, corn prices will rally significantly to induce more acres to be planted in 2009. Keep in mind that with quickly escalating costs of production for corn, growers will need a large incentive to plant more corn acres next year, so it may require a large price increase to see acreage shift away from soybeans into corn.” He said reports of higher than expected corn yields, near record levels, as harvest begins are likely to be the only thing that would prevent a volatile increase in corn prices this fall and winter.

“Although only anecdotal reports are available so far, the fact that many of us are hearing very little of earlyharvested yields suggests corn growers have little to brag about in terms of yields so far,” he said. For livestock producers intending to feed corn this winter, Mark pointed out that this means they need to be ready to lock in prices when the bottom appears this fall. “Although it is uncertain when that will occur exactly, it will likely be a quick bottom with a rapid price increase, similar to the precipitous decrease since July 1,” he said. — John Robinson, WLJ Editor