Current Marketing Thoughts
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Corn Bulls Thinking Market Could be Ahead of Itself....
Jul 30, 2014
As we have continued to see corn prices trend lower, the question many are asking is have we reached a bottom yet, and that has the bulls excited. Not for sure if that is the case but we have seen another bank, Goldman Sachs, begin to think the end is near on the corn price descent or at least stabilize. I would have to agree that the market has a fairly high yield number priced into the market at this point, that may be inching up to the mid 170's bpa. With the recent dry spell, although coupled with season cool temps, there is enough uncertainty out there that could have many questioning these yield numbers. I know it seems like the deck is stacked against us, but as I mentioned yesterday, the amount of fund buying power on the sidelines, is unprecedented for the grains. With a any bullish, or not as bearish, slant on this corn crop and you could see a knee jerk reaction that could whipsaw these prices higher. The trade appears to be able to digest a yield number up to a 176bpa yield estimate, without too much negative repercussions but anything higher and the wheels could come off. With that being said, we could still see some price stabilization, as most of the bears question the downside that is still left in the market. As we have heard over the past weeks, the downside still could slip drastically lower to that $3.10 area, that many tech guys have mentioned, and even further if the crop continues to get better, as many in the trade think. If we drift to these levels, I still feel like this is in an area we start to see demand pick up. I think at these price levels guys should be patient and continue to focus on the production side to insure higher yields. From a marketing perspective, the "basis" is my biggest concern at the moment. Make sure that you have your "basis" information on the radar screen, and if there an opportunity to lock in at an attractive level, pull the trigger. CLICK HERE for my daily report....
Is China's Corn Crop Seeing Some Setbacks? Yes, Chinese production may be pulling back a bit. I'm hearing talk that extremely dry conditions in some minor corn production areas could ultimately cause the Chinese crop totals to be reduced by 6-7 MMTs from their current estimate. The problem is this won't be much different than last years record crop, so don't get overly excited just yet.