Cooler temperatures put a damper on corn prices.
This was not a good week to be a corn producer, at least not when it comes to prices. December corn set new contract lows on both Tuesday and Wednesday, and the price declines are likely to continue for until the harvest lows are hit.
"From a technical standpoint the market is clearly in a downtrend," says Adam Stout, risk management consultant with INTL FCStone, Kansas City. "Traditionally the corn market bottoms out prior to harvest."
Improving weather conditions were the main driver that sent December corn prices to lows not seen since November 2010.
"The bull is running out of time," says Jerrod Kitt, director of research with the Linn Group, Chicago. He expects lows to hit over the next two weeks on corn as the weather premium is removed from the market.
Cooler Temps Cool Prices
Temperatures across the Corn Belt fell have plunged just in time for pollination. As of July 21, less than half of the nation’s corn was silking. This week and next week will be critical periods for the corn crop, and weather forecasts, for the most part, are calling for moderate temperatures.
"Even though it has been dry, temperatures have been so moderate that there is not as much concern over the lack of precipitation," says Stout.
Heading for Record Yields
While harvest in the heart of the Corn Belt is still several weeks away, new-crop corn from Texas and the Southeast has started to hit the market. By mid-August corn producers should be harvesting in Arkansas, Tennessee, and Kentucky, with Missouri and Illinois harvest getting under way in early September.
"We would not be surprised to see record yields in the eastern Corn Belt," says Kit. That would mean corn yields above 180 bushels per acre in Illinois, 171 bushels in Indiana, and 174 bushels in Ohio. "We could easily eclipse those levels," he adds.
Longer term, the question is how low can corn prices go, particularly if the 2014 harvest is large.