By Joanna Levin
USUALLY, news that US farmers have planted less corn (maize) would cause prices to rally. But, last week, the market did the opposite.
July maize futures moved down sharply to end trading last Friday (April 3) down 8.25¢ on the week to 260.6¢/bushel (156p/bushel). December maize dropped 1-2¢ to 272.4¢/bushel.
According to the USDA, farmers intend to plant 32.7 million hectares of maize this year, up slightly from 32.5m hectares last year, but substantially lower than traders expectations of 33.4m hectares.
So why did the market react bearishly? One explanation is that the USDA also announced lower-than-expected wheat plantings, resulting in a shortfall of 1.1m hectares in analysts combined maize and wheat forecasts. The result? traders refused to believe the USDA figures because they dont seem to add up.
In any case, these figures are the result of a survey conducted on March 1 and may change if the sodden conditions in the south-eastern states disrupt the normal planting season and cause last-minute changes in the crop mix.
Couple this with news of improving weather, poor exports and ample stocks of old crop still available, and traders are selling off. Maize stocks on March 1 were reported to be 125m tonnes – 2.5m tonnes higher than trade estimates and up nearly 10m tonnes from a year ago.
The market could rally if the wet weather in the Corn Belt forces US farmers to delay their planting, but most analysts expect the downward trend to continue.