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Another Record Corn Yield?

In August, will we hear whispers of ‘the best crop ever?’

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.
 
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If you have questions or comments, contact Top Farmer at 1-800-TOP-FARM, ext 129.
 
Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.
 
Carol Tillmann Front Desk Administrative Assistant | Stewart-Peterson Office: 800.334.9779 | Fax: 262.334.6225 ctillmann@stewart-peterson.com
www.stewart-peterson.com
 
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson. Stewart-Peterson refers to Stewart-Peterson Group Inc. and Stewart-Peterson Inc. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with both companies. Accordingly this email is sent on behalf of the company or companies providing the services discussed in the email.

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