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Corn bearish on record-high US production, weak demand
Corn prices have again dropped to $4/bushel levels from a seven-week high witnessed a few sessions ago. They are under pressure on higher production and weak demand. Last week, the USDA projected record production and higher carryover stocks. This has offset domestic concerns in other countries, including India. The robust production projection has neutralised concerns over crop conditions turning bad in South-Eastern and Eastern Europe, where drought has affected corn. In India, the need to use corn for ethanol is driving up demand.
On the other hand, China, the largest importer of corn in the global market, is looking at a record-high harvest of the hardy crop. Also, the production of pork is likely to decline due to low inventories. At the same time, cases of the swine flu, which results in 100% fatality among pigs, may decline. This will affect the demand and prices of corn. Research agency BMI, a unit of Fitch Solutions, has lowered its price forecast for corn to $4.25 a bushel.
However, any disruption in the wheat market, including feed, due to geopolitical concerns, could help corn prices recover a tad.