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.
The corn bulls have been hard fought to find any smidgen of sentiment that was in their favor. Now, will the wheat rally, spurred by the geopolitical tailwinds in Russia, provide the gift that they have been waiting for, or will this rally be short lived, as each of the last rallies have been sold off? Wheat has put on its rally cap over the last few trading days, being up in those sessions. The weather story continues to be less of a story as each day passes and the temps stay low and the rain chances increase. Maybe the rains don't come to fruition and we see things to continue to remain dry and push the lofty USDA yield estimates in question? You can argue that the USDA is going to raise new-crop demand a bit, perhaps a 25-50 million bushel jump in corn used for ethanol and perhaps a slight jump in corn used for feed as lower prices entice more usage. But I still see no way to offset the rise in new-crop production. The USDA is currently projecting a 13.860 billion bushel crop on a 165.3 average yield. The trade seems to think we are now closer to a 14.2 to 14.5 billion bushel crop with a 172 type average yield. Informa came out yesterday and appears to believe the USDA will move form their current 165.3 yield estimate to around 168.0. This would obviously be on the low side of what the trade is currently estimating, but I wouldn't be surprised to see the USDA be fairly methodical and patient in their upward revisions. Can the cautious tone give the corn bulls a sliver of hope, to allow for additional sales? I don't think that I would bank on that sentiment and continue to reward any rally by adding more protection to the downside. Lets not fall asleep at the wheel and think that the fundamentals will not push this market lower, with USDA news over the next two reports. CLICK HERE for my daily report....
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