Corn prices could continue to edge higher, despite large supplies in the United States, says the president and lead analyst with Pro Farmer Canada.
The corn market has bottomed and is starting to move higher as more attention shifts to demand for the crop, said Mike Jubinville.
U.S. corn exports have been strong and may exceed the expectations of the U.S. Department of Agriculture. Meanwhile, industrial demand for corn in the U.S. is setting new records every month, due largely to the expanding ethanol industry.
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These factors provide some justification for a corn market that appears to be inching higher, said Jubinville.
High nitrogen costs have a bearing on expectations for corn plantings in North America in 2006. The USDA predicts fewer corn acres compared to a year ago, or 80.5 million acres compared to 81.8 million last year.
Also positive for corn prices are concerns in the U.S. about the hard red winter wheat crop. The worries are driven by the lack of rain in important winter wheat growing areas such as Texas and Oklahoma, said Jubinville during the Manitoba Corn Growers annual meeting in Winnipeg last week.
If the dryness persists, that could entice American growers to put more of their cereal acres into spring wheat come seeding season. That would reinforce expectations of fewer acres being planted to corn in the U.S. in 2006.
“When you throw into the mix this bullish sentiment that is permeating the wheat sector at this point in time and the idea that corn acres are going to be a little lower next year, it starts to build some justification for a market that is starting to trickle up,” Jubinville said.
According to a USDA report in January, total corn production in the U.S. topped 11 billion bushels in the 2005-06 crop year, making it the second largest on record.
