February 2011 corn may rise to $ 5.50 per bushel

Traders said during an industry conference recess that the strong US corn prices were mainly driven by demand rather than supply. He sees US corn price rise targets at $5.50 per bushel because of strong market demand.

In the September supply and demand report, the United States Department of Agriculture estimated that US corn production this year will reach 334 million tons, up from 333 million tons in the previous year and 307 million tons in 2008.

However, the expectation of high yields of corn has not dragged down corn prices because the shortage of feed wheat has caused the price of wheat to soar in recent months.

Since the global mixed feed producers use corn instead of wheat, the United States has been the main beneficiary. The United States exports more than 50 million tons of corn each year.

Traders said that in 2010/11 (September to August), US corn ending stocks may be only 28 million tonnes, at least 5 million tonnes below the previous forecast because of increased feed corn use. Therefore, the price of corn must increase further to stop the transfer of arable land to wheat. In February next year, farmers will start to decide on the scale of sowing, and corn prices may increase during this period.

In addition, markets worried about lower than expected yields in Illinois, Iowa, Indiana, Ohio, and Missouri, and also supported rising corn prices. Heavy rain during corn growth has affected corn yields, but yields are still higher than in the previous year.

This year, the yield of corn on many farms in Illinois in the United States was 180 bushels per acre, which was 5% lower than the previous forecast, but it was higher than last year's level and far higher than the national average of 165 bushels per acre.

Traders say that soaring wheat prices make wheat farming more attractive, and if corn must be kept up, corn prices must rise to very high levels. This year, US corn plantings have increased by 1.5 million acres.