US maize market follows weather forecasts

By Joanna Levin

US corn (maize) prices had a volatile week as the market reacted to weather forecasts. The rally that started mid-June peaked early last week after prices in some futures contracts had climbed as much as 18%. Many traders paid heed to private weather forecasts that show hot and dry weather in July, the La Niña sequel to El Niño. This would cut corn yields and be bullish for prices.

However, after hitting its highest level since early May, the market then retreated sharply on news of milder weather forecasts from the official National Weather Service. The Chicago July futures contract closed on Monday (29 June) at 238.5¢/bushel, down 12.25¢ from 250.75¢/bushel a week ago.

Overall, the US maize market is depressed by oversupply and todays corn acreage report was expected to show an increase in corn acres planted to 81.5 million acres, from 80.2 million last year. Meanwhile, corn stocks at 1 June are expected to have risen, compared to last year.

While domestic output is growing, export sales remain disappointing. The renewed weakness in the Japanese Yen and aggressive corn exports from China are hurting US sales. For the week ended 18 June 18th, the USA 26.3 million bushels. But it needs to export nearly 30 million bushels each week to keep pace with US Department of Agriculture supply and demand estimates.