“No good information” for the grain markets.
Jul 10, 2009
The July USDA Supply and Demand report held no good information for the bull! With a 153.4 bu. per acre yield, carryover for next year is going to be at least 1.55 billion bushels. Since the crop conditions report is indicating a much greater crop than last year, the potential is quite high that the August report will increase carryover potential. I know there are a lot of producers out there who think USDA is crazy right now. The acres are not out there and the crop is not as good as the trade is being made to believe. Frankly, I’m not far from your opinion. The problem is it will not be proven until we get to fall for yield and January for the final acreage figures. Between now and then you have to trade the reports and that implies the potential of carryover moving above 1.8 billion bushels which suggests we don’t have to ration demand right now. What we have to do is get carry back in the market and force producers to store product forward.
Implications: If you have forward sold inventory you are happy! If you have unsold inventory you are really having problems. My suggestion is dump the inventory on any moderate bounce and re-own around the August USDA Supply and Demand report. Looking forward the real challenge now is getting December 2010 corn next spring up to a price that is attractive to forward sell.
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