The difference of growth in the course of corn with wheat is striking. It flies more than 70 since the beginning of the year for his December delivery traded on the Chicago Board of Trade (CBoT) while the same deadline for corn virtually playing with his last awards of 2006. However, corn has been one of the most popular agricultural raw materials speculation between September 2006 and mid-May of this year, due to the expectations raised by the application of bio-ethanol in the United States.
But the promise of a Flash of additional demand for this cereal growth was not an appointment. This is a first reason explaining that its courses are not kept around 4 dollars per bushel. "The use of corn for ethanol has been reduced because of indications are the decline in production capacity of refineries and the slower progress than anticipated starts of new plants," announces the U.S. Department of Agriculture (USDA).
Another great reason of unexpected collapse in the price of corn is the offer. Unlike the harvest 2005-2006 and 2006-2007, 2007-08 could result in a surplus in the physical market. From statistics collected by the USDA, world production is expected to reach 774,10 million tonnes for a consumption of 769,62 million, or a surplus of nearly 4.5 million tonnes against deficits in respective for 2005-2006 and 2006-2007, 7.9-22 million tonnes. Final stocks, they are reported in increase of nearly 5 million tonnes in 2006-2007, to 105,44 million. However, they did not reach the levels of 2005-2006 nearly 123 million tonnes.
Ethanol and China
However, the reversal of market conditions is not the product of the decline in global consumption. In 2007-2008, it was likely to rise by more than 6 of a crop to another. Seller message came on the other hand offer, to leap 10. Almost all of the increase in production expected in 2007-2008 (70.8 million additional tonnes from the previous harvest) will come from the big U.S. cereal. The speed by which they began to corn to take advantage of the additional demand from ethanol has been surprising. The American market absorbs only 40 of the overall offer, reminiscent of the economists for Merrill Lynch. In 2007 - 2008, they cycled through, the cultivated areas devoted to this cereal grew about 20. In addition, they, conclude the conditions of the crop in the United States are "excellent", resulting in "extremely high levels of production. Elsewhere, in the East, Argentina and the Brazil Europe, production stagnates or is only slightly higher than last season.
Ethanol and China will continue to grow the total demand. In 2006-2007, the U.S. ethanol industry has used some 2.2 billion bushels of corn, or 20 of local production versus 14 a year earlier. Morgan Stanley table 3.1 and 4.3 billion bushels respectively in 2007-2008 and 2008-2009. In the years to come, the American grain "will find it difficult to repeat the massive crop rotation which helped, this year, to propel the production of corn", provide experts from Goldman Sachs. As to warrant a return of speculative investment on this raw material.