Commodites: Corn prices up, supported by potential global turmoil

By Jason Sagebiel, FCStone | March 28, 2014

March was a strong month for the corn market with May futures trading to the $5.02 level. With that type of price action the producer was actively rewarding the market allowing basis levels to relax.

Support was steady and gradually led by potential global turmoil in Eastern Europe and by global demand. The Ukraine will be second or third largest exporter of corn this year. Last year, Ukraine was fourth behind the U.S., Brazil, and Argentina. They have exported a record amount thus far and are expected to export an additional 158 million bushels of corn and 92 million bushels of wheat. There hasn’t been failure to meet export obligations to date but traders have definitely added in a risk premium to the grain markets in case the situation escalates.

U.S. corn export sales continue to outpace the USDA projection leading to the increase for the marketing year. Export sales are projected at 1.625 billion bushels compared to 731 million bushels last year. Corn for ethanol demand has remained steady at 5 billion bushels but that figure is expected to slightly decline in the future due to plant slow-downs. Nonetheless, the market will be anticipating the stocks report and new crop plantings at the end of March. This will set the tone for spring and summer trading coupled with a weather market. With the planting acreage prospects traders will begin to pencil in yields and determine an outcome for next year’s supply and demand table.

May futures

       

Date

High

Low

Close

 

March 21, 2014

4.81

4.76

4.79

 

February 21, 2014

4.63

4.56 1/4

4.59

 

February 7, 2013

7.34 1/2

7.26 1/2

7.33

 
         

A version of this commodities report will appear in the June issue of Ethanol Producer Magazine.