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Another Record Corn Yield?
Our research indicates that crop ratings mean little this early in the growing season.
As July approaches, their impact and importance increases. As of June 24, 77% of the crop is rated good to excellent. This compares to the mid- to upper 60% the previous two years at this time.
The logical conclusion is that another high-yielding crop could be at hand. If weather cooperates through July, much of the crop will be in its home stretch by early August.
Whispers of “the best crop ever” will be heard. Yet, the end of July, and for that matter August, is some ways off. Consequently, a highly rated crop in June does not necessarily correlate to high yield by harvest.
In fact, it is not unusual for highly rated crops early in the season to, in part, pressure prices into the Fourth of July. The reset button is triggered, and weather for the second half of the growing season must continue to be near ideal.
If weather is less than ideal, it won't take long for corn prices to recover. With December corn futures dropping more than 70¢ off their high from late May, the market is offering an excellent long-term opportunity for end users to secure inventory. We expect farmer selling to be very light from this price level for the next six weeks, until they feel more assured that a crop is at hand.
Therefore, it is likely there will be upward price pressure from lack of farmer selling, as well as end user buying. Speculative interest has gone short corn futures and, as of this writing, is estimated to be net short in the range of 25,000 to 30,000 contracts. While this is not a big buildup of short positions as compared to, let’s say, 150,000 to 200,000, it does represent a very significant turnaround from well over 200,000 contracts long this past March.
The question now is whether managed money will add to short positions or quickly buy back and go long if weather conditions suggest otherwise. While it is easy to extrapolate the potential for a record yield (record 176.6 in 2017) when there is adequate rainfall and conditions are near ideal, it wouldn’t take long for analysts to quickly change their minds and positions if rainfall doesn’t continue to accumulate.
Be ready! Buy calls now to cover forward sales or feed needs.
If you have questions or comments, contact Top Farmer at 1-800-TOP-FARM, ext 129.
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Carol Tillmann Front Desk Administrative Assistant | Stewart-Peterson Office: 800.334.9779 | Fax: 262.334.6225 firstname.lastname@example.org
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