By Joanna Newman
AFTER weeks of stability, US maize prices have finally succumbed to the bearish influence of wheat and soya beans.
The market has plummeted over the week, with the Chicago March futures contract dropping from 215.0¢/bushel last Tuesday (23 February), to a low of 205.0¢ on Friday, before recovering some ground to settle at 210.25¢/bushel this Tuesday (2 March).
At these levels, maize is probably cheap enough to make some farmers eligible for Loan Deficiency Payment (LDP) subsidies from the government.
This has fuelled the growing debate over the spiralling costs and market distortions of the LDP programme.
Meanwhile analysts argue that the fundamentals for maize do not justify such low prices.
Domestic demand is running at healthy levels, while maize acreage is expected to shrink this spring as US farmers are lured by the governments higher subsidies for soya beans.
Exporters are outdoing market expectations. During the week ended 25 February, 41 million bushels were inspected for export, well ahead of the 30 million bushels inspected during the previous week.
With maize prices so low, any unfavourable weather for maize planting during March could cause a rally.
Traditionally, the focus of the market switches at this time of year from winter stock levels and international pricing to planting conditions.