By Joanna Newman
FOLLOWING months of decline US maize values finally appear to have turned around.
A combination of higher export demand, reduced global maize output and strong domestic feedgrain consumption has triggered this recent rally.
Futures values have climbed 10% so far this month and are now at their highest level since last December.
The Chicago May futures contract settled on Tuesday (23 March) at 228.50¢/bushel, up from 223.75¢ a week ago and 210¢ at the beginning of March.
On the export side, there is renewed talk of additional aid to Russia and shipments to South Korea. The expected Asian economic recovery should support maize exports.
Domestic demand is bolstered by the ongoing high population of cattle in the nations feedlots.
During February 1.79 million cattle were placed in feedlot pens, up 20% from a year ago, according to US Department of Agriculture data released last week. Maize constitutes a significant portion of US feed rations.
Meanwhile the supply outlook supports firmer maize prices with other world regions suffering reduced maize production or adverse crop weather including South Africa, China and Mexico.
At home, American farmers are likely to plant fewer acres with maize because of more advantageous federal subsidies available for soya beans.
Attracted by the higher prices, US farmers have started selling more of their maize stocks onto the market and this could dampen the price rally in the short term.