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Corn to Fall in the Next 30 Days?

04/11/2014 @ 9:34am

On April 9, the USDA released its monthly Supply and Demand report. There was a friendly surprise for corn, and the initial reaction was higher prices. However, by day's end, prices ended on a sluggish note with futures losing five to seven cents. History suggests that prices have a tendency to work lower over the next thirty days. Why?

As spring fieldwork heats up, concerns about late planting diminish. This is reflected in lower prices. Just as important, the market seems to take a step back after the Quarterly Stocks and Acreage report, as well as the April USDA Supply and Demand report. In a few short weeks, the unknowns of these reports become Known. For the next month, there isn't a whole lot of new news from the government that's going to provide direction. If fieldwork progresses without delays, end users and traders either exit or hold off chasing higher prices. As planting in the South moves northward, actual results begin to surface on weekly progress reports.

In recent years, there has been little correlation between planting progress and final production results. Many producers will tell you that last year their better corn was probably their later planted corn. A number of things had to occur for this to take place. In the end, it would suggest that, due to the ability of farmers to plant so rapidly, concerns about late planting have less and less validity compared to ten or twenty years ago. Bear in mind, last year about 40% of the corn crop was planted in one week. In the end, early weather uncertainties suggested there was little reason for the market to put price premium into corn. Without friendly news, or at least perceptive concerns, prices will drift lower. Corn producers should be prepared to sell in late winter or early spring.

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