Market expert Tommy Grisafi details where he thinks corn prices are headed and what’s pushing them there.
The extreme range of crop conditions this year has made predicting this year’s crop potential extremely difficult, says Tommy Grisafi, president of Indiana Grain Company.
"You look out your backyard and things look great," he says. "But then you go see friends in Iowa and it looks like a train wreck."
Currently 17% of the U.S. corn crop is in excellent condition, according to USDA’s July 14 estimates, and 49% is in good condition. That is a vast improvement over last year, when only a combined 31% was in good or excellent condition.
And, as Grisafi reminds, there’s still a long time before this crop will hit the combine. "For as good as things look today, things can change really quickly."
Grisafi shares his analysis of the corn market with Farm Journal Media’s Pam Fretwell at the 2013 Farm Journal Corn College, near Heyworth, Ill.
The weather is definitely the dominant force in the grain market equation. "Right now we’re focused on demand and weather – and weather trumps all," he says.
December corn futures closed at $5.035 Monday, after the contract dipped to $4.98. The contract is down 16% this year on forecasts for record U.S. output.
Grisafi says with the lack of demand for U.S. corn, the marketplace doesn’t need to see high yields this year. "It is definitely a reality to see $4 or lower for corn."
But, he isn’t completely negative on corn.
"I don’t like to be short corn below $5, when we have high-priced crude oil," he says. "We know these ethanol plants are very capable of ramping up production. They have been used to $7 and $8 cash corn. If you throw them $4.50 cash corn – they will use it. That could create some demand."
Thank you to the 2013 Corn College sponsors:
AgriGold, BASF, Chevrolet, ESN/Agrium, Great Plains, Honeywell, Koch, Novozymes, Precision Planting, SFP, Top Third Marketing