The price of corn soared to its highest value in nearly two-and-a-half years on Thursday amidst the U.S. government reducing domestic inventory forecasts, which constricted food supplies around the world, Bloomberg reports. Inclement weather continued cutting into harvests.
March-delivery corn futures increased 1.7 percent to $6.42 per bushel on the Chicago Board of trade. In July 2008, corn futures raced to $7.9925 per bushel.
Stockpiles of the commodity in the U.S. will be "extraordinarily tight," according to a Thursday report by Luke Mathews, a commodity strategist at Commonwealth Bank of Australia. "Those tight stocks prompted record U.S. corn prices a few seasons ago."
The Agriculture Department slashed estimates of the U.S.' corn harvest by stating there will be a global production deficit of 20.1 million metric tons. Many crop-producing nations of South America are suffering from drought conditions as a result of a weather phenomenon.
La Niña "looms as a major risk to send world soybean stocks-to-use ratios to multi-year lows and prices to record highs," according to a note from Rabobank analysts Luke Chandler, Keith Flury and Erin FitzPatrick. "Lower-than-expected production in South America would increase demand for U.S. soybean exports."
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.