One grain market analyst tells Brownfield that the corn market could be in what he calls “an explosive situation” over the next few weeks, depending on South American crop progress and moisture prospects for the U.S. heartland.
It leads Scott Shelladay of the Trean Group in Chicago to believe that the corn market will make new highs between now and March.
“I don’t have a lot of people in that camp yet,” Shellday says, “but we’ve got such a tight supply right now that I think that arguably, depending on whether or not you believe the USDA—and there’s a lot of chatter about what their numbers are like all the time—but I think we could be in an explosive situation.”
Shellady is not alone in that analysis. The agriculture advisory firm AgResource projects corn prices will hit nine dollars by May.
Shellady says a lot depends on if and when the managed fund accounts reenter the market.
“The folks that have been worried and waiting for this market to back up a little bit before they procure some more product have been getting paid for doing that,” he says, “albeit not that much because we really haven’t backed off a ton—it just more like put a cap on the market—but I think you could see some explosive activity going into the first quarter.”
On the other hand, some analysts believe that favorable conditions in the coming months could take some of the tension out of the market. But according to Reuters report, “even if a supply recovery occurs next year and cools prices, the underlying picture of robust world demand, driven by China, will keep prices historically high and stocks tight.”