Corn Plunges to Lowest Level in Seven Weeks

Corn plunges as expected, as it was known if wetter and dryer weather was forecast, the price of a bushel would come under pressure, after a period of consistent gains.

Already a number of corn fields, and other crops, have received almost 2 inches of rain, with other expected to get at least 1.25 inches up to 2.5 inches this week.

Over the next week there is no hot weather expected in a sustainable manner, making it almost perfect growing conditions for corn.

“The market is taking out the weather premium after weekend rains boosted crops in areas that had been dry,” said Greg Grow, the director of agribusiness at Archer Financial Services Inc. “Forecasts this week are wetter and a bit cooler than expected.

Corn futures for December delivery plunged 13.25 cents, or 3.3 percent, to $3.94 a bushel on the Chicago Board of Trade, the biggest drop for a most-active contract since the latter part of May.

Ohio Corn Crop Strong So Far in 2010

The corn crop in Ohio has been very strong this year, as a wet and warm spring resulted in the crop taking off in most areas, already reaching as high as 10 feet tall on a number of farms.

Planting season also began early, giving it a head-start on the year. Weather throughout the growing season has also remained humid and warm, providing the best conditions corn could have.

If a moderate amount of rain is the outcome for the latter part of the growing season, Ohio could possibly break their record corn harvest set last year of 165 bushels an acre.

Corn Futures Fall to Earth as Inventory Higher than Analysts' Estimates

Corn farmers got a dose of reality, and analysts egg on their face, as a corn inventory forecast from the government surpasses analysts' estimates.

“People were a little disappointed,” said Greg Grow, of Archer Financial Services Inc. in Chicago. “We had a big rally, so traders are lightening up on some positions.”

With supply being the driving force behind the recent surge in corn futures prices, that pretty much bursts that media-induced bubble, as corn futures dropped 0.3 percent on Friday in response to the news.

On the Chicago Board of Trade corn futures for December delivery fell to $3.9525 a bushel.

Corn prices soared 2.8 percent for the week on speculation the wet weather damaged the crop in the Midwest, because of three times more rain than normal.

Hot Weather Hindering Corn Pollination in Indiana

The heat is taking its toll on Indiana corn, as some corn is standing as high a 8 ft. in the fields, while other is only two feet tall, according to some Indiana farmers.

That could result in mixed pollination as the season goes on.

According to the USDA, the condition rating on the corn crop in Indiana has dropped for the last couple of weeks, confirming the concerns.

Heavy moisture in the spring has also contributed to the heat stress a number of farmers in Indiana are experiencing with their corn. The heavy moisture resulted in shallow rooted plants.

Corn Up on Farmers Withholding Supplies

Farmers in the U.S. have been withholding corn and cash premiums have risen as a result. Demand overseas has increased in the mix as well.

“Farmers are beginning to let loose of some corn and soybeans, but the pipeline supplies have not been replenished” to load ships, said Ron Uhe, a risk consultant for Mid-Co Commodities Inc. “We have a battle for supplies between processors and exporters.”

The corn premium surpassed September futures, increasing by 40 cents to 45 cents a bushel, in contrast to 40 cents to 43 cents a bushel.

Corn futures for September delivery increased 7.25 cents, or 1.9 percent, to $3.855 a bushel.

Hot, Dry China Weather Offering Corn Futures Support

The potential of low supply in the United States has corn prices pushing up, and add to that the hot, dry weather in China, and you have a couple of factors working together to offer corn prices support.

Although not proven yet, the perception that corn supplies will not be near as high as estimated has drawn traders to the market, and pushed up corn prices as a result.

For China, they could end up buying corn from the U.S. if the weather has indeed been as devastating on the corn crop in China as thought.

So for now, corn has entered into a bullish stage, at least until a firmer grip on supply is confirmed either way.

Corn Futures Settle Higher, Continuing Upward Trend for Week

Corn futures finished up again on Thursday, settling at 6 3/4 cents, or 1.8%, higher at $3.77 1/2.

December corn was up seven cents or 1.8 percent, at $3.96 1/4 a bushel.

Much of this is borrowed from concerns over wheat, which could yield less than projected, which would increase demand for animal feed, raising prices.

Expectations that the U.S. Department of Agriculture released on Friday will show a tighter corn balance sheet has increased interest in the corn market.

Colorado Corn Harvest Up 22 Percent Over 2009

The latest estimates of the U.S. Department of Agriculture have Colorado corn farmers increasing their corn harvest by 22 percent over 2009, with projections of 1.2 million acres of corn to be harvested.

According to the USDA report released last week, corn producers in Colorado planted 1.35 million acres of corn this year. That takes into account corn for all uses.

In the U.S., altogether about 87.9 million acres of corn have been planted this year, an increase of 2 percent over 2009.

Concerns over whether or not there will be enough for animal feed has caused wheat prices to move up over the last month.