Have corn prices lost the good fight?
Aug 02, 2013
Corn analyst, as I suspected, are beginning to ratchet their yield estimates higher: Lanworth is now at 158.5 bushels per acre; FC Stone at 157; I am hearing several other private forecasters are now up closer to 160. As I have been saying for weeks, this now puts the USDA's 156.5 yield estimate in jeopardy of being overly conservative. Don't forget Informa will throw their hat in the ring later this morning, at around 10:30am CST. From where I sit, the "yield" looks as if it will tick a bit higher, but a bigger question in my opinion remains "total production." I personally think "harvested acres" could fall by 1-2 million from the current USDA estimate of 89.1 million. The problem is a 160-162 type yield would still give us in excess of 14.0 billion bushels and a carry out close to 2 billion. The point I am trying to make is the Bears almost have the corn market in "check mate." No matter what the argument by the bulls: more preventive plant acres, fewer harvested acres, a drought out west, stronger ethanol demand, improving export sales, etc... the bears have a stronger offsetting rebuttal. The fact remains, DEC13 corn has now fallen to levels not seen since NOV of 2010. Technical bulls are keeping a close eye on the $4.50 level, in hopes the corn market can somehow muster enough support to keep prices from falling even further. My hunch is we might take a brief pause prior to the Aug 12th USDA report, trading in somewhat of a sideways channel, with neither the bears or bulls wanting to overcommit going into the numbers. After that, the bears more than likely resume their downward pressure. With China supposedly looking at another record corn harvest, demand from the Asian giant may be further off than many of us have been thinking. Meaning prices could push further to the downside before we se them step in any big form or fashion. Moral of the story, don't think it is a guarantee that China steps in as a big buyer on a break below $4.50. They may end up being a lot more patient???
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