Call corn oversold if you want, but fundamentals and emotion continue to support record-breaking futures prices.
On the supply side, USDA's final 2006 crop estimates released about 10 days ago added more fuel to corn prices. In that report, estimated corn production was lowered from 10.745 billion bu. to 10.535 billion bushels based in reductions in estimated number of acres planted and harvested, as well as a reduction in yield of 2.1 bu./acre. Carryover stocks were also reduced by 183 million bu. to 752 million bu. Projected corn prices for 2006-07 were raised another dime to $3-$3.40/bu.
Keep in mind, even with the reduced estimate, the crop in 2006 was the third largest on record.
For price perspective, the University of Missouri's Ron Plain and Glenn Grimes reported in their "Cattle Outlook" last week: "For the period of 1908-1942, corn prices averaged 78¢/bu., for 1942-1972 the average corn price was $1.26/bu., and from 1973-2005 the average corn price was $2.37/bu.
"The probabilities appear high for another step-up in prices for several years. If corn prices increase in future years by the percentage of the average of the two previous step-ups, we will have corn prices above $4/bu. for the next period."