Corn: price rise of 11% in 2 weeks - when will the turnaround come?
Corn prices on the CME rose by the equivalent of €2/dt in mid-June. It is highly unusual for investors to take such risks again so shortly before the new USDA report. While it is well known that the US corn and soybean supply is dramatically tight this year, there are additional reasons for the recent price surges.
First of all, the price of crude oil has risen to a high level above the $100 per barrel mark and seems to be establishing itself there for the time being. This is happening just as the travel season (loosely translated as vacation season) is in full swing with high fuel consumption. High fuel prices are also driving up biofuel prices. Over 90% of biofuel is made from corn. US bioethanol plants are picking up speed again and are asking for corn
The dollar exchange rate has fallen sharply. This improves the competitive position in the export business. In fact, significant quantities of US corn have been sold to Brazil. The reverse is actually true.
The weather outlook in the US is forecasting a heat wave for parts of the corn and soybean belt, centered around Iowa and south of there. Rising precipitation clouds are not expected to provide the necessary rain until the end of July, but the forecasts are still highly uncertain. This triggers memories of the disastrous year of 2012, particularly because maize and soybeans are currently in the first crucial yield formation phase (pollination and flowering phase).
The question of how long or how short the price increase will last can be seen to some extent in the stock market prices: there were only minimal increases for the following months.
The September futures are quoted at €16.66/dt compared to the current July futures at €21.60/dt at an exchange rate of $1.31 per €
