CBOT corn feels effects of USDA report, PED virus

(Lisa Guenther photo)

CNS Canada — Corn futures on the Chicago Board of Trade were lower during the week ended Wednesday, as prices plunged with the release of a U.S. Department of Agriculture acreage report which showed planted acres exceeding previous projections.

Values are also feeling pressure from continuing favourable weather, according to Terry Reilly, senior commodity analyst for Futures International in Chicago.

“We expect the corn to be well advanced and in good shape across the majority of the U.S.”

That holds especially true for new-crop supplies, Reilly said, adding he believes the September contract will gradually decline below $4 initially (all figures US$), “and then maybe trade down (near) the $3.75 mark by August.”

Hog disease is also adding to the pressure as well, he said.

“Looks like the impact of the (porcine epidemic diarrhea) virus on hogs definitely did impact the amount of corn for feed during the last quarter.”

Reilly said he expects this action to continue into the final quarter as well.

Soybeans were also down sharply for the week ended Wednesday, after the USDA report showed farmers in the U.S. will plant a record 85 million acres this year, higher than the previous estimates of 82 million acres.

“For new-crop we could potentially see one of the highest carryouts in more than a decade,” said Reilly, adding total crop production could essentially wind up being a billion more bushels than what was produced during the early 2000s.

“So therefore we look for prices to gradually decline back out of the teens and the August contract could be as low as $12 by the end of the month.”

Weather conditions are favourable right now, he said, and the situation is starting to remind him of 2004 when “everyone had a good year.”

Reilly said he eventually sees the November contract trading down at $10.25 or $10.50.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.



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