10th Sept 2012, by Agrimoney
Newedge joined commentators upbeat on corn prices, but said that sellers may need patience to achieve the best prices, with a poor start to 2012-13 for US exports a potential pressure for now.
The broker - forecasting the drought-hit US corn crop will fall to 10.51bn bushels this year, some 270m bushels below the current USDA estimate – said that corn prices would "remain in an uptrend".
"December corn futures could retest and possibly exceed the high of $8.49 a bushel," reached a month ago, Newedge analyst Dan Cekander said.
However, the highest prices may not be seen until close to the next harvest, as in 1995-96.
"In that year, the market trended higher, peaking in July, as demand gradually proved itself, with hand-to-mouth consumer buying driving the market to its eventual high."
The forecast which tallies ideas last week from Macquarie, which said that, on a quarter-average basis, Chicago corn futures values will peak in the July-to-September period of 2012, at $8.75 a bushel.
"Deferred corn futures could trade to a long-term technical objective of $9.60," Mr Cekander said
Export signals
However, he also flagged for now the "heavy overhead resistance for the corn market" which could come from the poor pace of US corn exports, signalling rationing on this source of demand.
"The early 2012-13 US corn export shipment pace is expected to be abysmal, with rate models soon to suggest an annual export program no better than 900m-1.0bn bushels versus the US Department of Agriculture's current export estimate of 1.3bn bushels."
"A threat of US corn exports only reaching 1.0bn bushels would certainly give the appearance that the US corn carryout [for 2012-13] could reach 800m bushels."
That would be above the level of 650m bushels that the USDA is factoring in, and imply a negative pressure on prices, although Mr Cekander did say that shipments were "expected to improve during January-to-March".
Wheat data
He flagged "difficulty" too with USDA forecasts for domestic wheat exports, pegged currently at 1.2bn bushels for 2012-13.
This represents an increase of 150m bushels on last season, despite exports in the first three months of the season falling by some 16%.
"That means over the next nine months the export pace will have to exceed last year's pace by 195m bushels, up on average an additional 5m weekly bushels - up 25%" for the rest of the season, which ends in May.
The estimate for hard red winter wheat exports accounting for one-half of these shipments also appears to be a little too healthy for our taste".
"A 50% hard red winter share of US wheat exports has not been seen in 25 years, since the 1987-88 season."
Newedge joined commentators upbeat on corn prices, but said that sellers may need patience to achieve the best prices, with a poor start to 2012-13 for US exports a potential pressure for now.
The broker - forecasting the drought-hit US corn crop will fall to 10.51bn bushels this year, some 270m bushels below the current USDA estimate – said that corn prices would "remain in an uptrend".
"December corn futures could retest and possibly exceed the high of $8.49 a bushel," reached a month ago, Newedge analyst Dan Cekander said.
However, the highest prices may not be seen until close to the next harvest, as in 1995-96.
"In that year, the market trended higher, peaking in July, as demand gradually proved itself, with hand-to-mouth consumer buying driving the market to its eventual high."
The forecast which tallies ideas last week from Macquarie, which said that, on a quarter-average basis, Chicago corn futures values will peak in the July-to-September period of 2012, at $8.75 a bushel.
"Deferred corn futures could trade to a long-term technical objective of $9.60," Mr Cekander said
Export signals
However, he also flagged for now the "heavy overhead resistance for the corn market" which could come from the poor pace of US corn exports, signalling rationing on this source of demand.
"The early 2012-13 US corn export shipment pace is expected to be abysmal, with rate models soon to suggest an annual export program no better than 900m-1.0bn bushels versus the US Department of Agriculture's current export estimate of 1.3bn bushels."
"A threat of US corn exports only reaching 1.0bn bushels would certainly give the appearance that the US corn carryout [for 2012-13] could reach 800m bushels."
That would be above the level of 650m bushels that the USDA is factoring in, and imply a negative pressure on prices, although Mr Cekander did say that shipments were "expected to improve during January-to-March".
Wheat data
He flagged "difficulty" too with USDA forecasts for domestic wheat exports, pegged currently at 1.2bn bushels for 2012-13.
This represents an increase of 150m bushels on last season, despite exports in the first three months of the season falling by some 16%.
"That means over the next nine months the export pace will have to exceed last year's pace by 195m bushels, up on average an additional 5m weekly bushels - up 25%" for the rest of the season, which ends in May.
The estimate for hard red winter wheat exports accounting for one-half of these shipments also appears to be a little too healthy for our taste".
"A 50% hard red winter share of US wheat exports has not been seen in 25 years, since the 1987-88 season."
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