The pattern of strong basis and inverted futures market prices described last week continues and has intensified in recent trading sessions. The expiring March 2012 futures contract is a 14 cent premium to the July contract, compared to the 5 cent discount at the end of February. It is still not clear if the strong basis and inverted futures market signals a shortage of corn, tight holding, or both.
Anecdotal information suggests that a large portion of current inventories of corn are owned by farmers as other commercials have given up ownership in response to the lack of carry in the market. The estimate of March 1 stocks will reveal where stocks are being held, but will not reveal ownership of those stocks.
The estimate, along with revealed rate of consumption over the next several weeks, will determine how much strength in old-crop prices is needed to stretch inventories until harvest.
"Expectations remain for a much larger crop and lower prices for the 2012-13 marketing year," said Good.