AFTER months of stability, the bottom has suddenly fallen out of the US maize market.
Official forecasts of larger-than-expected domestic maize stocks, coupled with excellent weather conditions across the corn-belt this summer have helped drive prices down abruptly to their lowest levels in eleven years.
On the back of improved conditions for maize production this year, the USDA has revised its estimate of ending stocks of maize up in its latest monthly Supply & Demand balance sheet to1.99 billion bushels.
This is the highest level in eight years, compared with Juneís prediction of 1.78 billion bushels.
Certainly farmers seem to be enjoying favourable weather this season. Maize fields are rated 78% good to excellent in the latest weekly government survey.
Faced with a 14% year-on-year growth in domestic inventories come harvest-time, the market has taken a beating.
The Chicago July futures contract has lost 14% over just the past ten days, closing on Monday, 12 July, at 180.0 cents/bushel.
However, with pollination only just commencing there is still some weather risk, which could force the USDA to cut its yield estimates next month.
Also good feed demand and healthy levels of exports (shipments at over a million tons a week) may help prevent prices to stabilise.