Corn Drops Nearly $1/bu. This Week

June 17, 2011 07:01 PM
 
Corn Drops Nearly $1/bu. This Week

 

The U.S. corn crop saw a $13 billion drop in past week, says Jerry Gulke, president of the Gulke Group. After reaching nearly $8.00/bu. in trading last Friday, the July 2011 corn contract on the Chicago Board of Trade retreated more than $1/bu. before settling the week down 86 ¾ cents.

Click here for Gulke’s full audio report.

"Depending on how much that affect any one person depends on how much grain they have at risk yet. I think what we’re hearing now is there is a lot less corn pre-sold this year. What is sold was sold quite a while ago."

weekend chart 0618The indications are that the upper limits were tested last week and demand was curbed significantly at those high prices. Granted, he says people still have to eat and corn will still see demand, but usage looks to be on the way down for the time being.

Attention is now turning to the June 30, 2011, USDA Acreage Report and the Grain Stocks Report. Gulke issues the caveat that the stocks reflected will be as of June 1 and they will not reflect what has happened in the month between the survey and the report release.

Ethanol was also a big story this week. Production is being curbed in the Western Corn Belt as concerns about flooding along the Missouri River is curbing some production. Then the U.S. Senate voted to stop supports for ethanol this week, further aiding the negative sentiment in the corn markets and causing concern of how the outside markets will impact corn.

Gulke says this move essentially puts OPEC in charge. "You don’t want oil companies in charge. Or if OPEC dumps a bunch of oil on the market at a time we have less demand and oil falls back to $65/barrel, then ethanol needs some help."

Friday’s Cattle on Feed Report may lend some support to grain prices. With a 4% increase in placements, there are more cattle in feedlots than the market anticipated, Gulke says.

 

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