Corn Takes a Bounce Today
Jul 27, 2009
The corn market enjoyed a nice upward trading bias day while beans were on the defensive most of the day. We continue to recommend to clients that corn will gain on beans in the next six months. We are currently long two March corn contracts for every one bean contract. The logic behind this position is the bean acres are going to increase while the corn will decline in the March report. Additionally, I believe South American producers are going to increase bean plantings to make up for last year’s yield loss, plus alternative crops such as cotton, corn and wheat are at low prices as compared to beans.
The big issue that will dominate the trends in the next 60 days is the lateness of the crop and when will early frost occur. Last week as I was traveling over to the Farm Journal Corn College, a lot of corn had not pollinated yet. This means we are going to have a lot of corn pollinating around the first of August, which means to get to black layer at least 60 days will be needed for development. That means no frost anywhere before Oct. 1 and preferably Oct 15. The talk is whether or not we see a repeat of 1974.
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