Corn inventories came in at an alarmingly low rate in last week's release from the U.S. Department of Agriculture. The January 11 report showed inventories at 8.03 billion bushels, below the predicted 8.22 billion.
This is significant, because expectations were already much lower than a year ago, when inventories were 9.65 billion bushels. These numbers remain depressed due to the historic drought that occurred last summer.
The 17 percent year-over-year decrease in inventories happens to coincide with a potential global recovery, as news from China is trending better, and Europe is perceived to be emerging from its credit crises.
The picture for corn suggest higher prices going forward, which is why I have adopted a long bias. My opinion will grow stronger if the March contract trades above $7.35. Once it does, I will look for an upside target of $7.65.