Did Tyson Foods’ announced plans to “stop using high fructose corn syrup and other ingredients in its branded products” change the long-term investment outlook for the US corn market? That was the key question we were left to ponder over the weekend. The announcement was posted on the company’s website last Monday (September 15), and when the trading week was through the December corn futures contract closed at $4.24, down 6.0 cents for the week, while the December-March futures spread closed at a carry of 17.25 cents and covered 55.5% calculated full commercial carry. In other words, there was not a dramatic shift in the market structure last week.
What I mean by this is the corn market did not show signs of a move to a demand market, in this case demand destruction as opposed to the demand increase associated with the US Energy Policy Act of 2005 that included higher Renewable Fuels Standards. By definition, a demand market creates a longer-term change in price expectation. When demand is increased, a higher price range is created. When demand is decreased, the market moves to a lower price range.
