|
"Since the beginning of the 2003-04
marketing year, on Sept. 1, the average daily cash price of corn in
central Illinois has traded between $2 and $2.39½," said Darrel
Good. "The marketing-year range in that price has been less than 50
cents only twice in the previous 30 years -- 1990-91 and 1992-93.
Over the past five years, the marketing-year range has varied from
60 cents to 80 cents per bushel.
"If $2 is the marketing-year low, the
highest price of the year would be expected to be at least $2.60.
Typically we could expect the highest price of a marketing year with
such a large crop to occur in the spring-summer following harvest.
The timing of a new high this year, if it does occur, is less
certain."
Export demand, acreage intentions and
weather will all influence price patterns, Good added.
"A new marketing year low price, if it
were to occur, would not be expected until late summer of 2004 under
the influence of another large crop," he said. "The trading range of
December 2004 futures will also likely exceed the current range of
$2.32½ to $2.60."
Good's comments came as he reviewed
corn prices, which have been in an extremely narrow range for the
past 14 months. Since Sept. 24, 2002, the average daily cash price
of corn in central Illinois has traded between $2 and $2.50½. The
average monthly price of corn received by U.S. producers from
October 2002 through September 2003 ranged from $2.15 to $2.35 per
bushel.
"The average for October 2003 will be
revealed on Nov. 28 and will likely be near $2.10," said Good.
"December 2003 corn futures have traded between $2.09½ and $2.60.
The trading range of 59½ cents is the third smallest of the past 31
years. The range was only 54¼ cents for the December 1987 contract
and 55 cents for the December 1991 contract. The December 2004
contract has had a trading range of only 27½ cents."
Good noted that relatively stable corn
prices since the fall of 2002 have come during a period when soybean
and wheat prices have been much more volatile. Since Sept. 24, 2002,
for example, the average cash price of soybeans in central Illinois
has had a trading range of $2.52, and the daily cash price of soft
red winter wheat at St. Louis has had a range of $1.45 per bushel.
"So far in the 2003-04 marketing year,
corn prices have been somewhat higher than expected, with a record
U.S. harvest near 10.3 billion bushels," Good said. "Support has
come in part from large exports and export sales and anticipation
that exports will remain large.
[to top of second column in
this article]
|
"The USDA has increased the 2003-04
marketing year U.S. export projection from 1.8 to 1.875 billion
bushels -- 282 million bushels (17.8 percent) above last year's
shipments. Through the first 11.5 weeks of the year, the USDA
reports that 400 million bushels of U.S. corn had been inspected for
export shipment. That total is 23.5 percent above the total on the
same date last year."
The increase in shipments, he added,
has been led by Taiwan, Egypt and Mexico. As of Nov. 13, the USDA
reported outstanding export sales of U.S. corn of 403 million
bushels, compared with sales of 320 million bushels on the same date
last year.
"Outstanding sales are up sharply for
all major buyers of U.S. corn -- Japan, Taiwan, Egypt and Mexico,"
he said. "In addition, outstanding sales to unknown destinations
stood at 80 million bushels, more than double the sales to unknown
destinations reported last year. The USDA continues to receive
reports of sales to unknown destinations under the daily reporting
system, with another 9.4 million bushels reported on Nov. 24."
It is the large sale to unknown
destinations that is of major interest to the market. These large
sales fuel speculation that China may be reducing export commitments
due to smaller supplies and higher internal prices, even though
shipments through October remained very large.
"If that is occurring or does occur in
the near future, the United States would expect to make much larger
sales to South Korea," said Good. "A return of South Korea to the
U.S. corn market, along with larger sales of U.S. corn to other
Chinese customers, could propel 2003-04 U.S. corn exports above
current projections and sustain U.S. exports at a high level beyond
this year."
U.S. corn supplies are large enough to
accommodate use this year at a higher level than currently projected
by the USDA, he noted. With use for all purposes projected at 10.025
billion bushels, year-ending stocks are expected to be at 1.35
billon bushels.
"That is, use could exceed current
projections by 350 million bushels and still maintain ending stocks
near 1 billion bushels," Good said. "The margin for increased use
may be even a little larger if the January corn production estimate
exceeds the November forecast.
"However,
with world corn consumption continuing to expand and inventories of
corn outside of the United States at much lower levels, the size of
the 2004 U.S. crop becomes increasingly important."
[University
of Illinois news release]
|
