By Joanna Newman
NEWS of growing maize stocks is largely to blame for a collapse in US prices, with futures values down 7% over the past week.
The market reacted nervously to a USDA grain stocks report, which showed a 15% increase in domestic maize inventories from a year ago to 5.7 billion bushels on 1 March. This was 100 million bushels above industry expectations.
Even a likely shrinkage in maize acres this spring has failed to bolster the market.
American farmers are expected to plant only 78.2m acres compared with 80.2m acres in 1998, according to a recent USDA report on planting intentions.
Many analysts are sceptical of this assessment and warn actual maize acreage could be higher.
Thanks to warm, dry weather conditions in the corn belt, 3% of the crop is already in the ground, slightly ahead of the five-year average of 2%.
Indeed, good weather forecasts are placing pressure on maize futures prices.
There is little prospect of a frost scare in the near future and timely rain is expected during April.
Analysts are pinning their hopes on an increase in domestic demand and a lot will depend on the relative value of maize versus wheat as a feed grain.
The USDA will release its own supply and demand projections for the year at the end of this week.
The Chicago May futures contract closed on Tuesday, 6 April, at 215.5 cents/bushel, (£53.02/t) down sharply from the close of 232.0 cents/bushel (£57.08/t) a week ago.