Corn Bulls Hold Out Hope...
Nov 13, 2013
Corn bulls continue to hold out hope that the DEC13 contract can eventually close back above $4.50. Unfortunately, the trade is finding it difficult to string together any real momentum and or multi-day rally with continued talk of increasing US supply. Keep in mind we have multiple states setting new records for yield along with a US harvest that is now running ahead of schedule. As of Sunday, IL only had 7% of their corn left in the field and IA only 12%, in other words both big production states are well ahead of their traditional pace. Bottom-line, several very good sources continue to talk about how "big crops tend to get bigger." If this is the case, then you have to figure the 14.0 billion bushel plus card is now close to the top of the deck. Demand is obviously a question mark, but with China now sourcing corn from Argentina, Brazil and Ukraine, how serious of a concern can it really be? From what I am hearing Brazil is still sitting on a large supply of corn and Ukraine is the worlds low-cost producer. Surprisingly, however, Argentina might be a little tighter than most have been anticipating. Rumors are starting to circulate that the Argentine corn crop may not have been nearly as strong as earlier estimates. Not saying this is a major bullish card, but it is certainly something worth keeping an eye on.
Lets not forget about the curve ball the EPA is fixing to throw at us in regard to the ethanol mandate. Moral of the story, major sustained rallies in corn could be tough to come by. Producers who have little to any new-crop sold need to keep one finger on the trigger at all times. If the market pops its head out of the cellar (by showing either a jump in the basis or flat price) you best be taking a shot at reducing more risk. Click here to receive my free daily newsletter sent directly to your email.