According to Hightower, “positive price action late last week appears to be setting a supportive tone in the corn market this morning despite a sharply higher dollar and sharply lower equities. Traders indicate that China demand and a lack of sellers in futures and cash markets are the main supportive factors.”

Aya Takada, writing in's Businessweek on May 25th says, “China, the second-largest corn consumer, has booked almost 1 million metric tons of imports from the U.S. and will probably buy more, the U.S. Grains Council said. That would be the biggest purchase in 14 years.”

Additional support is coming from the USDA Weekly Crop Progress Report. According to,“the USDA estimated U.S. corn 93% planted, ahead of 80% a year ago, and a 89% five-year average. USDA rated the corn crop as 5% very poor-poor, 24% fair, and 71% good/excellent.”

Hightower cites the weather as an additional supportive factor. “Weather got mostly dry and warmer over the course of the weekend in the US. Hot weather is forecast across the region for at least the first half of this week with scattered mostly light showers in most of the area over this period.” This outlook is viewed as supportive by most traders.

So what should we expect going forward? According to Jason Simpkins, Managing Editor of Money Morning, “corn prices have slumped some 24% since January and more than 50% since hitting a record high $7.65 a bushel in June 2008. Now they are being further threatened by potentially the largest corn harvest in history.” Whilst high export potential and a stronger dollar may help to sustain prices in the coming months, the combination of the European debt crisis and the possibility of a bumper crop should exert downward pressure. Expect to see prices steady or slightly down in the coming months.
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