The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Corn traders have to be wondering how long the short covering rally can last. Problem is the bears are already pointing out the fact 17 US states are either in the process of or have already ensured record yields will be harvested in 2013. There is also talk that the current USDA "feed demand" estimate for corn is overly optimistic. On the global front, we are also facing stiff headwinds as world corn supplies push to levels not seen since 2000. In fact several respected sources are now talking about DEC14 corn prices eventually falling to sub-$3.50 levels before finding a solid bottom. My question remains, if everyone is already on the same page, how many NEW bears are left to help drive the prices lower. Remember, just as we needed to constantly be adding NEW bulls to keep prices moving to the upper end of the range ($7.00 to $8.00) we need to be adding NEW bears to the equation to push prices to the low end of the range ($3.00 to $4.00). My guess is the longer we try and hold the markets head below what many believe is the cost of production it will violently fight back in an attempt to catch its breath.
Morgan Stanley saying corn is one of their top bullish bets: Reports are circulating that the bank is not only bullish short-term but thinks corn prices could average $5.30 a bushel in 2013-14, much higher than most any other analyst. The difference of opinion seems to come from the thought that global demand will rebound much higher on the cheaper prices and in turn world supplies have peaked and will soon start to tighten. Goldman Sachs and other large investment banks believe there is still more downward price pressure possible for all three major crops (corn, beans, wheat).
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