By Joanna Newman
WITH the spring planting season over, concern of US maize producers and traders is dominated by the emerging crop.
This past week in the market has been typical for the time of year.
Futures prices surged ahead of the Memorial Day weekend on expectations of hot, dry conditions that could hinder the newly planted maize acres.
However, a mild, wet holiday weekend favoured the farmers and turned sentiment bearish in Chicago after the long weekend.
Futures prices retreated quickly on signs that the maize fields are progressing well. Indeed, the US Department of Agriculture rates 75% of the young crop good to excellent.
The Chicago July contract climbed from 214.8¢/bushel on 25 May to 219.5¢ on Friday (28 May), before dropping again to 216.3¢ a week later.
Experienced market-watchers expect this kind of volatility to continue throughout the summer.
Any signs of drought could cause a so-called ìweather scareî and a sharp rally in prices, especially given the current depressed level of US maize values.
America has not experienced a serious drought in eleven years and is vulnerable this year, due to 1998s El Niño.
Farmer selling has been slow over the past couple of months. Producers are holding out in the hope of a weather-rally.
With so much inventory waiting to be sold off at higher price levels, analysts argue that this will put the brakes on any weather-related price rise in coming weeks.