The steady slide of corn prices  took a detour for the better this week, as weather markets, projections from USDA  and a major crop tour eased the risky road to $4 cash. And even if $4 corn is found, a Texas A&M economist feels user demand will support higher prices down the road.
Price levels took a traditional post-July 4 path downward from about July 10, when December 2013 corn futures were still above $5.25 per bushel, to about Aug. 10, when the market had fallen to below $4.50.
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But after more price pressureoccurred when USDA projected a 28% higher, 13.8-billion-bushel crop on Aug. 12, its Farm Service Agency hinted acreage numbers may be lower. The market then jumped over 15¢.
Futures surged above $4.85 the past week after reports, via the Pro Farmer tour, that dry weather was holding back production. And that was on top of many fields still behind due to wet conditions.
Mark Welch, Texas A&M AgriLife Extension grain marketing economist, said even though lower acreage numbers and prospects for a later crop caused the price increase, “we’re still looking at a record crop” that will likely put pressure on nearby corn markets.
“But it’s also interesting to see what’s happening on the corn use side,” Welch told Corn + Soybean Digest on Friday. “With the lower prices, we’re seeing increased interest in export markets. Some domestic livestock numbers are also picking up, with more placements of lighter weight cattle and poultry, and ethanol demand appears favorable.
“We’ll see overall use categories increase substantially in accordance to big corn supplies.”
Welch reminds farmers that a record corn crop won’t guarantee long-term supplies. “On a normal production and marketing year, there’s still only a 60-day supply of corn available worldwide,” he said. “That should bode well for continued strong prices and grain demand,”
Call optionsmay help ease the price pain if the market dips to $4. “If we get to $4, it’s a tremendous buying opportunity for users,” Welch said. “If you’re a grower and want to sell corn, consider buying call options to take advantage of price increases down the road.
“With the demand base we’ve built, it doesn’t seem reasonable we will stay at those ($4) levels.”
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