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Entering the buy zone

Agriculture.com Staff 02/13/2016 @ 3:26pm

Corn futures continue to trade in a mostly sideways pattern, give or take 15 cents either side of $3.50 December.

Historically, prices slide lower over the next one to two weeks as harvest pressure mounts. This window of time is when end users should be more aggressive when looking to secure feed needs.

Once the harvest is near complete, whatever corn is not sold will likely get tucked away in storage until better pricing opportunities emerge for producers. End users should be aggressive when buying corn in late August through October.

As a rough rule of thumb, a 25% decline in corn prices, from contract high to harvest low, is generally a good estimate of the price range for the year. December 07 corn topped at $4.31 and recently bottomed at $3.24-1/2, producing a range of just under $1.07, or a change of 24.8%. In addition, given a fight for acres with soybeans and increased storage capacity, it is unlikely that farmers will be aggressive sellers of corn much below $3.25.

While the door is open for a potential price slide if yield on this year's crop is much greater than anticipated, the more likely event is a price bottom, and soon.

If farmer selling slows and end user buying develops, look for prices to gradually climb higher into late fall and early winter. If an acreage battle or speculative money comes into play as it did last year, then a recovery of 50 cents or more is likely.

If you have any questions or comments, please contact Bryan Doherty at Top Farmer by phone at 800/TOP-FARM, ext. 129.

Corn futures continue to trade in a mostly sideways pattern, give or take 15 cents either side of $3.50 December.

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