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The Market Is Asking Farmers to Plant Corn

What a difference a week makes.

The sentiment in the grain sector went from overwhelmingly bearish to wildly bullish, in just over a week.

See this week’s Successful Marketing Newsletter.

Corn prices posted nearly a 50¢ rally in six trading sessions. The highs scored on Monday evening were new six-month highs. This is important because all of the shorts placed in the last six months are now under water on that trade. Does this encourage further short covering?

The old-crop corn that was being held on to, in hopes of a rally, is now being sold. It won’t be long before those natural sellers are gone. Then who will want to sell?

That list is likely fairly small until the weather changes.

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Some farming operations will not get all the acres planted this year. Not because they don’t want to, but because Mother Nature is preventing them from getting in the field. Maybe this is not as bad as it seems. Meaning we may be able to decrease acres which would decrease production.

In turn, we would see supply fall as long as demand stays the same. This would help prices remain strong. If there is a way to help compensate those who were unable to plant this year via the newly announced Market Facilitation Program, it truly could be a win win for the American farmer.  

The corn to soybean ratio has moved from 2.40 in mid-March down to 2.07 on Tuesday. Recall that a ratio under 2.2 favors corn acres over soybeans while a ratio over 2.40 favors soybean acres over corn.

See the full Successful Marketing Newsletter to review the chart.

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