By Joanna Newman
TWO crucial Government reports released this week sent US maize prices plummeting.
But the market reaction was by no means as severe as for other major grains.
Some traders were disappointed to learn that the national inventory of maize climbed 11% year-on-year to 8.05 billion bushels, an increase of 85 million bushels from previous estimates, according to the quarterly USDA grain stocks report.
However, other analysts had estimated even higher inventories and reacted favourably to the news. An encouraging sign was an increase in consumption to 3.02 billion bushels from 2.73 billion a year ago.
US farmers produced the second largest maize crop on record last year at 9.76 billion bushels, up 6% from 1997, according to the USDAs annual production report.
With much of this bumper harvest still unsold in farmers hands, futures prices have come under pressure.
The Chicago March maize contract settled on Wednesday (13 January) at 215.25¢/bushel, down from 223.75¢/bushel a week ago.
Weather conditions in South America will continue to influence the North American market.
Unless Brazil and Argentina see sufficient rain throughout the next couple of months, this could damage grain crops in the southern hemisphere and tighten up world supplies.
On the export front, US traders are hoping that the Government will step in again soon to buy up maize for food aid programmes to Russia.
This weeks devaluation of the Brazilian currency will make Brazils grain shipments even more competitive on world markets.