"When you go back to 1995-96 there were a lot of things that helped the market rally to above $5.00 (a bushel) and one of the things was Chinese buying corn rather than selling," said Steve Freed, analyst for ADM Investor Services.
Corn prices fell below the $2.00 mark this fall, far below the record $5.54-1/2 set during the late summer of 1996.
Analysts said corn prices are at or near a harvest low and may begin a gradual rise through the winter trading doldrums. US farmers are nearing completion of this year's harvest.
China's presence as a key corn exporter, back-to-back bumper corn production years in the United States and solid output of feed grains in other countries combined to drive the bellwether new-crop CBOT December corn contract to a new contract low of $1.95-1/2 per bushel overnight Tuesday.
Dale Gustafson, analyst for Citigroup, said corn futures may fall further to harvest lows this year of around $1.90 per bushel in early November and that a pickup in export demand would be needed to lead the market out of the forest.
"What we need to see in here is a sustained better pace of export sales to give us a boost in the market, I do think there's a case to be made for exports getting better, but it's going to be gradual," Gustafson said.
In its October crop report, the US Department of Agriculture forecast US corn exports for 2005/06 (September-August) would total 2.0 billion bushels, up from 1.815 billion last year. USDA will release fresh export numbers in its November crop report on Thursday, November 10.
Gustafson said China was a "wild card" and did not think it would begin to import corn until late next year, if then. There is data to hint that China may begin to buy corn rather than sell it, which could lead to higher corn prices.