Most market-watchers were surprised USDA dropped its national average corn yield projection to 146 bu. per acre. The immediate reaction was, “If it’s that bad now, how low will it fall?” It’s now the market’s job to anticipate how low it will fall and how much demand is being destroyed by today’s high corn prices.
The “trick” is balancing lost bushels against destroyed demand. When that balance is hit, corn futures will post the high. Was that price top posted last week? If it wasn’t, the high isn’t far from that level. Increased price volatility at higher prices is a clear sign of a maturing bull market.
Soybeans still have demand coming to the market. Domestic crush is still good and importers seem to be booking ahead to “guarantee” required supplies.
Cattle and hogs are on the edge... these markets are starting to fear a potential increase in beef and pork production as breeding stock is liquidated.
(This is the lead item on the front page of this week's newsletter.)