Friday, July 16, 2010

September Corn Futures Up on Perceived Demand

Several factors have been moving the price of grains lately, not the least of which has been dry and hot weather in the western and eastern portions of the Midwest in the United States. That has resulted in corn prices going higher, as uncertainty concerning the needed rain and if it'll come remains.

But corn has been unwound some from its grain cousins, with the ethanol factor being always in play, as well as the growing demand from China. Both of these are been increasing in 2010.

Recent data from the USDA shows there was less corn acreage planted than originally estimated, and production estimates were also lowered on July 9 by almost 1 percent, to 13,245 billion bushels. The corn production estimate cut came from the corn acreage report.

Even so, we're still on a production course to reach record highs this year, which means there is a lot of optimism concerning surging demand.

Another factor on the negative side, as far as corn prices go, is the possibility of cutting the ethanol subsidy program, which has increasingly come under fire for its costs and controversy over damage to power equipment and some cars, as well as the environment.

The budget crisis and outrageous spending of the Obama administration has led us to that place.

There is mounting pressure to eliminate the ethanol tax subsidies, and even proponents are talking of cutting it by 9 cents from the current 45 cents a gallon, to possibly 36 cents a gallon for the subsidy.

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