Due to the jump in grain prices for CORN (quote) and soybeans (SOYB, quote) from the drought in the Midwest farm belt of the United States, the United Nations Food and Agriculture Organization’s food price index rose 6% in July, the steepest spike in nearly three years.
Strong cane harvests in key growing regions like Brazil, India, and Thailand have depressed sugar prices, diverting consumption from food to fuel and heightening pressure on corn syrup and ethanol producers alike.
The corn chart looks eager for a short-term bounce, but the longer trend looks bearish as U.S. farmers dedicate more acreage to the crop than ever, creating a glut that neither ethanol production nor an Argentine drought can overcome.
Last month corn stocks in South Africa fell to the lowest level in nine months due to smaller than expected harvests and increased exports.
Since mid-December corn and soybean futures have been trending higher up to hit six month highs this week. The technicals confirm the move and remain bullish heading into the U.S. planting and growing season for both crops.
Are corn prices going up? Is corn over and done? To answer those questions, traders need to put on both their bull hats and their bear hats.