Corn Market Situation
 

The fundamentals for old crop corn remain dismal. The huge crop from last year still weighs on the market despite excellent demand. Feed use has held up well and will come very close to equaling last year's record despite the financial problems in the hog sector. Export have increased nearly 300 million bushels over year ago levels, while domestic food and industrial use continues its steady gains. None-the-less, price for old crop will remain under pressure.

New crop corn markets have broken out below support as weather has allowed for planting in the mid-west. Even though the Prospective Planting Report indicated a reduction in corn acres was likely this year, a total supply very close to last year is likely due to the heavy carry-in stocks that will be on hand this fall. The fundamental picture for the 1999 crop at this point looks very similar to that for the 1998 crop. Large total supplies, strong demand, burdensome carry out stocks and prices averaging near the $2.15 level on a national basis.

In looking at marketing strategies we need to understand that without a major threat to the crop, it is unlikely we will see much of a price rally this year. Supplies are quite adequate to meet any unexpected demand as well. So, we may be forced to focus on relatively small pricing opportunities. Be prepared to move ahead with any sales that need to be made at or before harvest. Use any rallies as pricing opportunities.

Technical analysis can be a value tool in finding possible future price levels. In late April, the December futures contract complete a bearish "head-and-shoulders" formation. That could point to prices falling to the $2.30 level in the short term, perhaps slightly lower. Longer term, downside targets would be at the $2.04 level, a long term support mark and the to $1.85, the lows set last fall.

There is a good likelihood that our cash prices could drop below the loan rate this fall and that Loan Deficiency Payments (LDP) may be available. Stop by the FSA office and find out what you need to do to be in position to claim any LDPs. Remember, when LDPs are available, we need to predict market lows in order to maximize the LDP. A perverse situation but one we must deal with, none-the-less.

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