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Whats going to happen tomorrow
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eddiedry
Posted 1/15/2007 13:42 (#88825 - in reply to #88374)
Subject: According to Corn&SoybeanDigest...........................



Wheatley, Arkansas
Corn Prices May Spike To $4.50/bu.!
Two Jan. 12 USDA reports sent corn prices soaring on Friday last week, says Alan Kluis President of Northland Commodities LLC.

"We may see between $4.20-4.50/bu. for May Chicago Board of Trade (CBOT) corn futures when the markets reopen on Tuesday," says Kluis. "Last week, May CBOT futures closed as low as $3.65/bu."

In the USDA's latest World Agriculture Supply and Demand Estimates (WASDE) report, the U.S. 2006-07 corn ending stocks were projected to be "752 million bushels, down 183 million bushels from last month as lower production is only partly offset by reduced feed and residual use. Corn production is estimated 210 million bushels lower, reflecting lower planted and harvested area and a 2.1-bu./acre reduction in the average yield."

The real shock to the market was the magnitude of the drop in corn stocks. "The corn crop was quite a bit smaller than most people thought," explains Kluis. "Most of the drop came from a reduction in the USDA's corn crop production estimates."

With corn prices now at their highest level since 1996, Kluis says there will be a call for farmers to opt out early from the Conservation Reserve Program (CRP) with no penalty. "We need a lot more corn acres according to this report, but if we have a huge increase in corn acres, we won't have enough beans," says Kluis. "The result is that we'll either have to slow down ethanol production and feed usage or encourage more crop acres from CRP and hay acres."

To see the USDA's 2006 Crop Production Summary, click on the following USDA Web link: usda.mannlib.cornell.edu/usda/current/CropProdSu/CropProdSu-01-12-2007.txt.

To view the USDA's WASDE Report, click on this USDA Web link:
www.usda.gov/oce/commodity/wasde/latest.txt.

By John Pocock
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