Corn prices continue the long retreat from the peak of September 2012, declining to the lowest level since late August 2010. The most recent price weakness reflects both supply and demand considerations, says University of Illinois Agricultural Economist Darrel Good.
“On the supply side, ongoing reports of yields that exceed expectations in many areas suggest that the next USDA forecast of the U.S. average yield will be at least equal and perhaps exceed the September forecast of 155.3 bushels,” he says.
Good says there is still some uncertainty about the magnitude of harvested acreage that will not be cleared up, at least partially, until the USDA releases the next Crop Production report. Even so, it appears that production will be large enough to result in a sizable buildup in stocks by the end of the current marketing year.
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“On the demand side, the partial shutdown of federal government activities leaves a void in the usual flow of weekly data, including export sales, export inspections, livestock slaughter, and broiler chick placements. The U.S. Energy Information Administration has also discontinued weekly estimates of ethanol production, imports, and stocks,” Good said.
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