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U.S. corn prices, basis nearby Chicago futures, drifted within the $2.00-$2.25 range during the first half of 1999, but midsummer witnessed price spikes in both directions; first a break to under $2.00/bushel followed by a short-lived recovery to over $2.25. Futures then lapsed into another drifting mode in the closing months of 1999, but with a bearish bias. In some respects the price action was similar to 1998 during which corn fell to a 10-year low. In both years the market was largely reacting to world production exceeding usage and the resulting increase in carryover stocks.The U.S. 1999/2000 crop was estimated at 9.47 billion bushels (240.5 million metric tonnes), the third highest on record and comparing with 9.76 billion in 1998/99. The record high 10.1 billion bushel crop was realized in 1994/95. Both harvested acreage and average yield decreased in 1999; acreage of 70.9 million compares with 72.6 million in 1998, while average yield of 133.5 bushels per acre was down from 134.4 bushels, respectively. Two states, Iowa and Illinois, generally account for about a third of U.S. production.The large crop, combined with the expected decline in 1999/00 exports, will lift carryover stocks as of August 31, 2000, to almost 2 billion bushels, a record high, and comparing with the year earlier 1.8 billion bushel carryover. The stock-to-use ratio in 1999/00 was forecast at 21 percent vs. the previous season’s 19 percent and the very low 5 percent ratio of 1995/96: typically, the higher the ratio, the greater the pressure on prices. In 1999/00 the average price received by farmers was forecast to range between $1.65-2.05 per bushel vs. the 1998/99 average of $1.95, and the 1995/96 record high of $3.24. If a less than $2.00 per bushel average is realized in 1999/00 it would be the lowest of the past decade.Corn is by far the leading U.S. feed grain with sorghum a very distant second. The crop year (marketing) encompasses September/August, but the international trade year is October/September. Animal feed usage in 1999/00 of 5.5 billion bushels is marginally higher than in 1998/99. Food, seed, and industrial use (FSI) was estimated at a record high 1.88 billion bushel in 1999/00 vs. 1.82 billion in 1998/99. The increases in FSI use during the past few years is not surprising considering the rising industrial demand for corn as a sweetener; High Fructose Corn Syrup (HFCS) usage continues to gain, up another 3 percent during 1998/99 from 1997/98. Corn used to make ethanol was also up, 9 percent from the prior year, and forecast to rise 5 percent during 1999/00.The U.S. is the world’s largest corn exporter, with Argentina a distant second. Importers are numerous but the leaders are generally in Asia paced by Japan, South Korea and Taiwan. U.S. exports in 1999/00 of 1.9 billion bushels (47.5 million tonnes) compare with 2 billion in 1998/99 and the record large 2.2 billion in 1995/96. U.S. corn imports are minimal, on average about 12 million bushels. World foreign trade in corn in 1999/00 of 66.8 million metric tonnes is higher than initially forecast and compares with the record large 69.3 million tonnes in 1998/99. The U.S. accounted for about two-thirds of total trade volume in both years but the amounts are down from the mid-1990’s when the U.S. supplied about 80 percent of world exports. Argentina now exports about 15 percent of the world total vs. less than 10 percent in the mid-1990’s.Japan is the world’s largest importer taking around 16 million tonnes in recent years. South Korea tends to be the second largest importer with 8.3 million tonnes in 1999/00 vs. 7.7 million in 1998/99. China imports small amounts of corn; estimated at one million tonnes in 1999/00 vs. 1.2 million in 1998/99.The near record large world corn production in 1999/00 of 599 million tonnes exceeded initial forecasts by 7 million tonnes with China and the U.S. accounting for most of the increase. This compares with the record world corn production of 605 million tonnes in 1998/99. China, second in world production since 1987/88, produced 128 million tonnes in 1999/00 vs. a record large 133 million in 1998/99. China’s corn output has increased sharply from the 1980’s when annual production averaged less than 100 million tons. The U.S. and China are forecast to produce about 61 percent of the world’s corn in 1999/00; Brazil and Mexico combined produce about 9 percent. The gains seen in China’s production in the 1990’s reflects increases in per capita income and meat consumption, and the need for more corn as a livestock feed.Global usage in 1999/00 of a record large 594 million tonnes compares with 583 million in 1998/99. China will use 120 million tonnes this year, compared to 117 million in 1998/99, and is the fifth consecutive year in which China’s usage has topped 100 million tonnes. The U.S. is the largest consumer using almost a third of the world total, 187 million tonnes in 1999/00. Brazil is in third place with about 34 million tonnes. World corn stocks are forecast to increase in 1999/00 to 113 million tonnes from 108 million a year earlier.U.S. #2 yellow corn prices vary with the location. Typically, Gulf Port prices are about 30¢ per bushel higher than prices in Central Illinois, while quotes at St. Louis run about 10¢-12¢ higher than Illinois prices. In midsummer 1999, #2 yellow corn in Central Illinois averaged around $1.84 per bushel vs. $1.86 a year earlier; for the Gulf ports the average was $2.20 per bushel vs. $2.24, respectively.Futures MarketsCorn futures are traded on the Beijing Commodity Exchange (BCE), the Budapest Commodity Exchange, the Tokyo Grain Exchange (TGE), the Chicago Board of Trade (CBOT), and the Mid-American Commodity Exchange (MidAm). Corn options are traded on the CBOT and the MidAm. The CBOT also trades Iowa Corn Yield Insurance futures and options and U.S. corn yield insurance futures and options.

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Excerpted from the CRB Commodity Yearbook.