Private Planting Estimates Help Fuel Corn Futures

March 21, 2011 04:14 AM

Rising corn futures picked up momentum today after Informa Economics estimated that producers will plant fewer corn acres than USDA projected last month.

News of Informa's estimates added one more piece of support to surging prices.
“Money is flowing back into the market after all the liquidation we saw early this week and late last week,” said Adam Stout, a risk management consultant at FCStone, LLC, Kansas City.
After a 9.0 earthquake and tsunami struck northeast Japan a week ago, markets plunged this week. Uncertainty about market prospects drove traders to reduce their risks by getting out of the market. However, lower prices and comforting news enticed buyers.
This morning, news services reported that Informa projected corn plantings at 91.758 million acres, compared with USDA's outlook projection of 92 million acres and last year's 88.2 million. Earlier this week, Allendale estimated corn plantings at 91.291 million acres.
For soybeans, Informa estimated plantings at 75.269 million acres, compared with 78 million in USDA's outlook projections, 77.4 million planted last year, and Allendale's projection of 77.193 million acres.
“When those numbers came out the market really started up,” said Stout.
May corn futures climbed to more than $6.91 while the July contract reached nearly $7, about 50 cents below the highs of early March. New-crop futures came within a dime of their early March levels.
Dan O'Brien, economist at Kansas State University, said the Informa corn planting number came in a little below the 92 million acres in his calculations. For soybeans, he has been anticipating acreage about level from last year's 77.4 million.
Beyond the acreage projections that USDA is scheduled to release March 31, O'Brien said he expects a host of supply and demand factors to keep markets volatile through the growing season.
He said this week's fear of the unknown, potential damage to Japan's physical port capacity and economy drove prices down, before new information helped push prices higher. USDA's weekly transportation report opened with an update on the status of Japan's ports, saying, “The main grain handling ports sustained little damage.” Reports from other sources eased trade concerns about the potential extent of damage from nuclear power facilities. “That news came into the market and seemed to have a calming effect,” said O'Brien.
Export news contributed to today's market strength, added Stout. USDA announced corn export sales to an unknown destination, and traders speculated that those sales may turn out to be more business with China.


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Spell Check

4/5/2011 04:18 PM

  For the customers that use corn for fuel, what should we expect next heating season in prices per ton? Thanks.

4/5/2011 04:28 PM

  For customers that use corn for home heating, what should we expect, per ton, next heating season in central New York State? Average use is 3.5 T per season.


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