Corn Prices in the Dirt

US farmers are planting corn at a breakneck pace, but as they get seed into the ground, prices are diving into the dirt as well. During the previous week, US farmers planted a whopping 36% of the corn crop, one of the most productive weeks on record. As of last Sunday, 55% of the corn crop has been planted, ahead of the normal pace, and analysts expect as much as three-quarters to be planted by the end of the weekend.

While getting most of their crop planted without major issues is a welcome relief for many farmers, it also signals to the markets that this is likely going to be another year with more corn supply than demand, which is hammering prices. This week, prices for corn dropped to a six-month low, trading as low as $3.54 per bushel.

Going forward, in order to get prices to rise, there will have to be a threat to this year's crop or a jump in demand, perhaps from foreign buyers. Next Tuesday, the USDA will issue its monthly Supply & Demand Outlook, which could give a spark to the markets if it shows tightening supply. Otherwise, prices could stay stuck in the mud.

Copper Shines as China Buys

China, the world's largest consumer of copper, announced continued stimulus, or easing programs, during the last two weeks, helping to boost prices to a new high for the year. Though the Chinese economy has shown signs of slowing, plans to stimulate or speed consumption could wake up massive demand if China resumes the economic expansion of the past few years. US consumption has stabilized since low interest rates have enabled more home and auto demand, the two sectors that require supplies of the red metal.

Just as demand seems to be picking up, copper mines, especially in Chile, have experienced production problems related to labor disputes adding to fears that supply will fall short of demand. The US dollar and unemployment figures could become especially important in determining price direction next month.

The copper futures contract consists of 25,000 pounds of high grade electrolytic copper cathodes. As of midday Friday the active July contract was trading at $2.92 per pound.