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Current Marketing Thoughts

RSS By: Kevin Van Trump,

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

I'm questioning both the USDA yield estimate and old crop Corn.

May 14, 2013

 Corn traders will now start to aggressively question the USDA's 158 bushel yield estimate. I have to assume the USDA was thinking we would be at or around 60% planted by May 15th. With this clearly not being the case... The question is what now happens to the new-crop yield number?

Even though the May Corn has gained handsomely on the July, and the bull-spreads have paid good dividends the past several months,  I am not so certain I like the thought of staying bull-spread the old-crop. With the fund roll being something to consider moving forward you have to ask yourself if they are really going to be eager to roll into a old-crop vs. new-crop spread. As of late the funds have not been too keen on playing old vs. new crop game and with new-crop yields in question and a possible game changing type report at the end of June I am just not sure the risk-to-reward makes a lot of sense. Yes, old-crop corn supplies are tight, but as with many things in life, overstaying your welcome can often be a costly mistake. From my perspective, producers with old-crop bushels should be moving bushels on any and all rallies or additional strength in the basis. Producers should have good coverage in place and risk reduced on new-crop bushels. A rally of some sort into the June 28th USDA Grain Stocks and Acreage report might be your next selling opportunity. Keep in mind there is also a USDA Supply & Demand report out on June 12th. 

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COMMENTS (1 Comments)

One of the latest reports out of the USBA suggests that late planting may be good for the crop, especially in years like 2013. History teaches that all corn planted later is more likely to yield higher than early planted corn and therefore the expected yields might well go up. (Slightly tongue in cheek) And who knows how much corn is out there that wily farmers have stashed and our carryover may be one of the largest in recorded history. This prognosticator is advising all farmers to sell any grain remaining as this is sure to drop the market to lower than $4! NOW, don't wait. LOL
3:10 PM May 14th
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