Weekly Market Comments: 5/19/10
Is corn building a price floor for its summer rally?
After using corn "supply adequacy" (1.8 billion bushel carryout) as our blazon for three weeks, we have failed to close below the $3.55 (low close) that seemed so inevitable as we approached the end of April. While we will stay associated with this price vision, our expectation for lower levels is waning. Monday's USDA crop progress report showed that even with a record planting pace, the corn crop is a subdued 55% emerged. This weekend's 80 degree temps may speed things along.
 Trade sources are telling us that China's largest state-owned foodstuffs import and export holding company, COFCO, will be in the market for additional corn purchases. 1.8 billion bushel carryout may just be the high side of expectations? (There is no expectation that this alone is enough to keep the market propped up, unless it is more than just a few more cargos.) |
No "Blend Wall" says U of I Ag Economist
 As for ethanol demand, University of Illinois economist Darrel Good says we have not hit a blend wall. "At 4.6 billion bushels, the amount of corn expected to be used for ethanol production exceeds the minimum amount needed to reach the federal biofuels mandates for the 2010-11 marketing year. The large projection reflects ongoing blending incentives represented by the spread between ethanol and gasoline prices. The projection implies that the so called "blending wall" will not be an issue in the upcoming marketing year."
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Who came up with this popcorn idea?
 The focus of today's CTFC meeting seems to diminish the necessity for futures contracts to provide market liquidity.
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