By Joanna Newman
LAST weeks hype and excitement about possible US maize aid shipments to Russia have given way to caution. Consequently, US corn prices have dropped again in recent days.
Faced with massive oversupply, US corn traders had responded eagerly to comments earlier this month by US Department of Agriculture Secretary Dan Glickman that Russia can count on as much grain as it needs.
Since then, Glickman has backtracked, stating that there would be no action until Russia actually makes a formal request to the USA for food aid and that any deal would include both meat and grains. Analysts point out that Russia could source corn competitively from other countries equally keen to off-load their corn surpluses.
Meanwhile at home, dry weather is helping American farmers bring in their maize crop and this is putting further pressure on prices. In the corn-belt, US producers have already harvested 57% of their crop, compared with 45% at this point in 1997 and a five-year average of 38%.
The USDA expects this season to produce 247 million tonnes of maize, up from 238m tonnes last year. With silos overflowing, farmers will be hard put to store all this maize, but reluctant to sell at todays prices.
While the US government has been busy offering a range of subsidies and programmes to loss-making farmers in recent weeks, seasoned market analysts warn that talk of market-supporting measures could dry up after the November elections.
On the Chicago Board of Trade, the December futures contract closed on Tuesday 21 October at 219.0¢/bushel, down from 228¢/bushel a week ago.