By Joanna Newman
AMERICAN maize farmers are winding up a bumper harvest that will produce the second largest crop and the second highest yield per acre on record.
On Tuesday (10 November), the Government raised its estimate of maize for this years production by 1% to 9.84 billion bushels. This is up 7% on 1997 with an estimated improved yield of 1.3 bushels/acre. Total predicted yield now stands at 133.3 bushels/acre.
This bearish news initially pushed maize prices lower, but some traders took advantage of the dip to buy up futures contracts, thereby dragging the market higher again.
The Chicago December futures contract settled on Wednesday (11 November) at 225.25¢/bushel, compared with 216.75¢/bushel just over a week ago. The market strength is likely to be short-lived given the overhang of corn in the market.
The US Department of Agriculture did raise its export estimate by 25 million bushels to 1.675 billion bushels because of a Russian food-aid deal finally announced last week. But this is a drop in the ocean. America will be left holding 1.779 billion bushels of carry-over stocks at the end of the season, up from 1.308 billion bushels a year ago.
All this maize will have to find a home. On the positive side, analysts point out that the relatively low domestic prices make US maize competitive against Chinese exports, which could help alleviate the oversupply situation.