Ticker: C
Exchange: CBOT
Trading Hours: Regular Hours: 10:30 - 2:15 EST.
Electronic: 9:30p.m. - 7:00 a.m. EST
Contract Size: 5,000 Bushels
Contract Months: Jul, Sep, Dec, Mar, May
Price Quote: Cents and Quarters per cent/bu.
Tick Size: cent/bu. ($12.50/contract)
Last Trading Day: The business day prior to the
15th calendar day of the contract month
Daily Price Limit: 20 cents /bu. ($1,000 / contract) above or below the previous day's settlement price. No limit in the spot month (limits are lifted two business days before the spot month begins).

corn chart
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Supply & Demand Tables Weekly Export Sales Grain Stocks
Crop Progress Supply & Demand Est. Prospective Plantings

Fundamental Overview:

The U.S. now tends to produce about 10 billion bushels of corn in a year. We are the leading exporter of corn in the world, exporting about 20% of the crop. Corn traded on the CBOT is mainly used as animal feed - about 55% of the crop. The remainder is used for food, alcohol, industrial usage and seed. Corn hit its highest price in the summer of 1996. Supplies were very tight, China was a big importer and there were weather problems.

Key Trading Notes:
Plantings: Look for USDA estimates of planted acres and weather during plantings. Too much moisture (rain) can delay the farmers from getting crops planted in time. In general, if crops get planted too late, the growing cycle is shortened and yields are lower. Too little moisture can get the crops off to a bad start - short root system. They may not be able to withstand dry conditions during the summer months.

Volatility: Corn tends to be most volatile during the Plantings (April), Silking Stage (July / August) for drought concerns and Harvest (October / November). The monthly USDA Crop Reports also cause volatility. They normally are released around the 10th of every month. The USDA gives updated estimates of supply and demand for crops.

Weather:Keep a close eye on the weather, especially during July and August. Extreme heat and dry conditions can drastically cut the yield during these months. Many traders will monitor the drought index closely. Temperatures above 100 degrees for several continuous days tend to cut yields.

Key Reports:

  • Planting Intentions
  • - Usually released around the end of March. This gives an indication of how much and which crops the farmers expect to plant for the upcoming season. Fewer acres than expected can be bullish for that particular crop.

  • Monthly Crop Production
  • - The USDA releases a monthly update on estimates for supply and demand of crops. These reports can cause extreme movements in prices, especially during the summer months.

  • Weekly Crop Progress
  • - These reports give an indication of the current development of crops. Also compares to crop conditions in previous years to use as a benchmark. If crops are behind schedule in developing, they have a lower than normal yield and vice versa.

  • Weekly Exports
  • - A good summary of the demand from foreign countries on a weekly basis.

  • Grain Stocks
  • - The USDA provides information on the current supply of grain stocks in the U.S. and the world.

Top 5 States for Production:

1. Iowa 18.7 %
2. Illinois 16.3 %
3. Nebraska 11.5 %
4. Minnesota 10.2 %
5. Indiana 8.1 %

Corn Outlook
February 12, 2004
Provided by USDA

Domestic corn utilization for 2003/04 was raised to a record 10,310 million bushels, up 8 percent from the previous year. Ending stocks were lowered to 901 million bushels, and the stocks-to-use ratio is the lowest since 1995/96. Season average corn prices are now projected at $2.35-$2.55 per bushel.

U.S. 2003/04 corn exports are forecast up 1 million tons this month to 51 million because global trade is up and the pace of U.S. sales and shipments is robust. World corn trade is up due to the stronger-than-expected pace of purchases by the European Union (EU), South Africa, Israel, and Poland. Forecast global production and consumption of coarse grains is up this month. However, foreign stocks are up enough to offset most of the decline in projected U.S. stocks.

Domestic Outlook
Increased Utilization Lowers Corn Ending Stocks to 901 Million Bushels

Corn utilization was raised this month for the 2003/04 marketing year leading to tighter stocks and rising prices. Total corn utilization was raised 80 million bushels to a record 10,310 million. This month-to-month change stems from increased domestic use and larger exports. Feed and residual was raised 25 million bushels to 5,800 million because of increased animal numbers plus lower feed and residual for barley and oats. Greater-than-expected ethanol production led to a 30-million-bushel increase in corn food, seed, and industrial use (FSI) to a record 2,510 million bushels. Corn exports were raised 25 million bushels to 2,000 million due to a strong export pace to date and growing world demand. These are the largest corn exports since the 1995/96 marketing year. Total corn supply is unchanged at 11,211 million bushels, and ending corn stocks were lowered 80 million bushels to 901 million. The stocks-to-use ratio was lowered nearly one full percentage point to 8.7 percent, the lowest since 1995/96.

No changes were made to the sorghum supply and demand tables, and mostly offsetting changes were made to barley and oats. Barley imports for 2003/04 were lowered 10 million bushels to 15 million. This was offset by a 10-million-bushel reduction in feed and residual to 65 million bushels. Barley FSI was lowered fractionally to 172 million bushels. Barley ending stocks were raised 1 million bushels to 98 million, the largest since 2000/01.

A 5-million-bushel reduction in oats imports was offset by a 5-million-bushel reduction in feed and residual. Oats imports and feed and residual are forecast at 90 million bushels and 135 million bushels respectively.

Tighter feed grain supplies led to the following higher prices for the 2003/04 marketing year. Corn prices were raised 20 cents on the low end and 10 cents on the high end to $2.35-$2.55 per bushel. Current cash corn prices are higher than this; however, a significant portion of the corn crop has been marketed at lower prices. The 5-year corn marketing average to date indicates that about 54 percent of the corn crop has been sold by now.

Sorghum prices were raised 15 cents on the low end and 5 cents on the high end to $2.35-$2.55 per bushel. Barley prices were raised 10 cents on the low end to $2.80-$3.00 per bushel. Oats prices were narrowed 5 cents on both the high and low ends and is now projected at $1.40-$1.50.

Feed and Residual Up From 2002/03

On a September-August marketing year basis, feed and residual of the four feed grains plus feed wheat is projected at 159.9 million tons, up from 157.3 million tons in 2002/03. The projected index of grain consuming animal units (GCAU) for 2003/04 is 89.6 million units, up from 88.4 million units a year earlier. Feed use per GCAU in 2003/04 is 1.78 tons, unchanged from the previous year.

The cattle inventory as of January 1, 2004, is 94.9 million head, down 1 percent from a year earlier. Cattle and calves on feed totaled 13.8 million head on January 1, 2004, up 4.5 percent from the previous year. Beef production for 2004 was lowered slightly to 25.4 billion bushels. Dairy cow numbers are down 2 percent from last year, and 2004 milk production is down fractionally from 2003.

Pork production for 2004 was raised 25 million pounds to 20.1 billion pounds, compared with 19.9 billion pounds in 2003. Year-to-year increases are also expected for broiler and egg production. Broiler production in 2004 is expected to be 33.9 billion pounds, compared with 32.7 billion pounds in 2003. Egg production is expected to be 7.4 billion dozen compared with 7.3 billion dozen a year earlier.

International Outlook

World 2003/04 Coarse Grain Production Boosted in Brazil

Brazil's coarse grain production forecast increased 3 million tons this month because of increased corn and sorghum production prospects. Corn production prospects increased 2 million tons this month to 42 million because area did not decline significantly as expected despite attractive returns to growing soybeans. Moreover, timely rains boosted yield prospects. However, projected yields are still down from last year's record. Brazil's projected sorghum production increased 1 million tons to 2.1 million as the historical series was revised.

The local marketing year for sorghum in Brazil was also changed from April-March to October- September. While in past decades most sorghum in Brazil was grown in the south during the main growing season, in recent years the vast majority of the crop is grown in the dry season in the center-west of the country, on land that is used for soybeans during the wet season. This year the crop has received special attention as exports to the EU have jumped.

The other country with a significant increase in projected corn production this month was Turkey, with a 0.6-million-ton increase to 2.8 million. Record area has been planted as producers turn to corn instead of cotton in some regions. These increases in world coarse grain production were mostly offset by reductions in 2003/04 prospects for several countries. Coarse grain production dropped 1.6 million tons for the former Soviet Union, mostly because of large reductions in Ukraine's barley crop and Russia's oats. These changes were based on recent official harvest estimates. South Africa's corn production prospects were reduced 0.5 million tons based on reports that planted area was the lowest since 1939. Dryness hindered corn plantings, especially in the western part of the maize triangle.

Global Coarse Grain Consumption Up

World coarse grain consumption is forecast up 2 million tons this month to 929 million tons, but the United States accounts for the increase with changes in foreign use offsetting each other. With reduced production prospects in the former Soviet Union, projected 2003/04 coarse grain use was reduced 2 million tons this month to less than 59 million. That is still a 4-million-ton increase compared with the previous year when more wheat was available. Coarse grain use was reduced this month also for Thailand, where avian influenza is lowering corn use. These declines in foreign coarse grain use are offset by increased prospects in Brazil and Israel. Larger expected corn and sorghum production combine with improving poultry export prospects to boost coarse grain feed use in Brazil 1.5 million tons to 41 million. Israel is expected to boost corn consumption because the availability of wheat for feeding is down sharply this year.

Global Coarse Grain Stocks Down Slightly

World coarse grain stocks are projected down 0.6 million tons to less than 100 million. The decline this month is in U.S. stocks, with foreign stocks up more than 1 million tons. Much of the increase in foreign stocks is because of revisions to China's corn trade data. Official Customs data reduced corn exports estimated for 1992/93 through 1995/96 and for 1998/99. This boosted 2003/04 beginning stocks of corn by 1.5 million tons.

U.S. Corn Exports Prospects Up 1 Million Tons

Increased world corn trade this month boosted prospects for U.S. 2003/04 exports 1 million tons to 51 million. The early-season pace of U.S. corn export sales and shipments has been robust. Increased import prospects for several countries boosted global corn trade prospects. EU imports increased 0.5 million tons to 4.5 million as tight grain supplies boost import purchases, especially from Brazil. South Africa's corn imports were increased 0.35 million tons this month because of reduced production prospects. Isrrael's corn imports were boosted 0.3 million tons as more corn has been purchased due to the scarcity of cheap feed wheat on world grain markets. Poland's corn imports were also increased 0.3-million-tons this month because of recent purchases. These increases were only partly offset by a 0.3 million tons decline in corn imports prospects for Turkey, caused by increased production prospects.

The only significant change in competitors' corn export prospects for the October-September international marketing year was for Thailand where reduced consumption caused by the outbreak of avian influenza is expected to boost corn export prospects 0.2 million tons to 0.4 million.

The early season pace of U.S. corn sales and shipments has been extremely strong compared with the previous year. A combination of Census and Grain Inspections data indicates 2003/04 shipments of over 17 million tons from October through January, up from less than 14 million a year earlier. Moreover, as of January 29, 2004, outstanding export sales reached 9 million tons compared with 5 million a year ago.

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