What is in this article?:
- Corn, soybean prices continue struggle
- Ethanol uncertainty continues
• Although futures prices for corn remain in a relatively narrow range, basis levels generally remain quite strong and at record levels for this time of year in some markets.
• In contrast, soybean basis remains near typical levels and spreads are generally large.
Corn prices have traded in a sideways pattern since mid-October, but are currently in the lower end of the recent range, said a University of Illinois agricultural economist.
“Soybean prices have trended lower over the past month with January futures now back near the early October lows,” said Darrel Good.
“Corn prices received little support from last week’s USDA Crop Production report containing a lower forecast for the size of the U.S. crop. The U.S. average corn yield is projected at an eight-year low of 146.7 bushels, 1.4 bushels below the October forecast,” he added.
“The potentially positive price impact of that reduction was muted by USDA’s judgment that feed and residual use of corn will only reach 4.6 billion bushels during the current marketing year, 100 million bushels below the October forecast,” he said.
The forecast is 192 million bushels below the surprisingly small estimate for the previous marketing year.
“The lower forecast for the current year was not offset by an increase in the projection for feed use of other grains. The projection of domestic soybean meal feeding was also reduced marginally,” he said.
Good said the lower projection of feed and residual use of corn reflects prospects for reduced broiler production as placements continue to run 6 to 8 percent below the pace of a year ago. He added that, although it is not cited as a factor for the reduction, the recent slowdown in exports of distiller’s grain may boost domestic feeding of that product.
According to Good, the pace of domestic feed and residual use of corn will be revealed in the USDA’s Dec. 1 Grain Stocks report to be released on Jan. 12. The experience of the past two years, however, suggests that the level of domestic feed and residual use may remain uncertain until the Sept. 1, 2012 stocks estimate is released.
“Ethanol production during the first 10 weeks of the 2011-12 marketing year was about 2.2 percent larger than during the same period of a year ago.