Fundamental Outlook—Bear Market Correction—Corn prices are moving sideways above their 11-month low. Bearish factors include (1) the Int’l Grain Council’s hike in its 2012/13 global corn production esti¬mate to 944.6 MMT from April’s forecast of 938.9 MMT, (2) the larger-than-expected USDA estimates for U.S. and global corn production and U.S. and global corn ending stocks, (3) dismal U.S. corn export sales (-54.5% y/y), and (4) wet spring weather that has relieved drought condi¬tions in most of the U.S. corn belt. The USDA is forecasting 2013/14 U.S. corn produciton at +31.% y/y to 14.14 bln bu (+31% y/y) and end¬ing stocks at 2.004 bln bu (vs this year’s 757 mln bu). Until the harvest, however, supplies will remain tight. The 2012/13 U.S. stocks-to-use ra¬tio of 6.8% is the tightest in nearly 2 decades and the global corn stocks-to-use ratio of 14.5% is the tightest since the early 1970s.
