Despite a stronger U.S. dollar and huge supplies, corn and soybean prices trended upward Tuesday, but stayed within a tight range.
December corn rose 3 ¾ cents to $3.41 in early trading, and CBOT December corn closed at $3.41 2/5, up 4 1/5 cents. January 2017 soybeans also climbed 1 ¼ cents to $9.85 1/2 in early trading, and closed on the CBOT at $9.89 2/5, up 5 1/5 cents.
“We just made the lows in corn yesterday, now we’re up 4 cents, [and] wheat is [also]up” says Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
So what is pushing up corn prices, given record supplies?
“The U.S. has the cheapest corn in the world," Roose says. “Ukraine corn is higher, Argentine corn is much higher, and Brazil is sold out of corn and is out of the export market until its second crop in June or July. Consequently, there is market support until the U.S. producer sells stuff again."
Analysts say they expect prices to stay within a tight range in the near-term.
“When [the price] starts to move up, someone always is interested who has to sell corn," Roose says. "We’re constantly seeing corn move on rallies - upside $3.60 to $3.70 - a tight window." Soybean prices are being held down by huge carryover, he adds.
Analyst Joe Vaclavik, president and founder of Standard Grain in Chicago, holds a similar view.
“The corn market is just oversupplied,” he says. “We’ve got too much corn. We don’t know what to do with it."
Storage has become an issue in many areas of the country, depsite the projection for record usage, according to Vaclavik.
“We’re still looking at 2.4 billion carryout next year, which is just way too much [corn],” he says. “It’s up almost 30% from last year.”