Current Marketing Thoughts
Kevin Van Trump
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Could a Late Summer Rally be in the Cards?
Jul 21, 2014
Corn traders have to now consider the fact over 50% of the US corn crop has "pollinated," under what appears to have been near ideal conditions. Yes, we are heating back up to more traditional mid-summer levels early this week, but it's still increasingly tough to argue against NEW record US corn production and higher yield estimates in the days ahead (bears thinking perhaps 170 plus coming down the pipe). Another scary thought in regard to why the US corn yield could move higher (its not all just about weather), is the fact soybean acres have seen such a dramatic jump. In other words, many producers who had suspect corn ground went ahead and rolled that into more soybean acres this year. Hence we have a record 85 million plus in soybean acreage and at the same timed may have lost some of the lower yielding corn acres. Today the trade will be eager to see the latest weekly USDA crop-condition estimate (scheduled for release at 3:00pm CST) most seem to be looking for another slight uptick, perhaps 77% now rated GD/EX. CLICK HERE for my daily report...
Could A Late-Summer Rally Be In The Cards? Many of the bulls like to reference and point to the 2010 corn crop for the possibility of a late-summer rally. For the sake of those who still have new-croup bushels to price (like myself) lets hope the market gives it some consideration. If you remember it was back in August of 2010 that the USDA estimated the crop at a NEW record high 165.0 bushels per acre. Weather conditions in some key areas started to shift and the national yield eventually fell to 152.8 bushels per acre by year end. To proved some detail I went back and did a bit of research. I found the USDA raised their yield estimate in Aug 2010 to 165.0 bushels. In their Sept 2010 report they lowered it down to 162.5. By Oct 2010 they lowered it down to 155.8. In Nov it was lowered again to 154.3. The Dec 2010 report they left the yield unchanged at 154.3. And by the final Jan 2011 report they reduced the yield down to 152.8. Below is a graphic we created to shows you the current USDA crop-condition estimate of 76% rated "Good-to-Excellent" compared to previous years at this juncture. Keep in mind, back in 2010 the USDA was still showing 70% of the crop rated "Good-to-Excellent" at the end of August, and 17% of the of the US corn crop was categorized as "Mature." In fact the last crop-condition report released that year by the USD was given the week ending October 10, 2010. At that point in time the crop was still rated at 68% "Good-to-Excellent" and we had already harvested 51% (to see details Click Here). In other words, even though conditions are better than we have seen in a long time, there is still a chance the overall US corn yield could end up sub-170 bushels per acre and below what the market currently has penciled in. I'm not saying this is actually going to happen, but I am letting you know just a few years back the overall yield fell by over -7% for the USDA's August estimate while the "crop-conditions" only setback a touch from 72 to 68% "Good-to-Excellent." I'm going to continue keeping our hedges in place and keep my "wait-and-see" approach towards additional cash marketing. CLICK HERE for my daily repoort.....