Another Reason I Am Still Bullish Corn
Apr 25, 2011
Weather continues to push the corn market as we traded up 22 1/4 to close at 766 3/4 in the July contract in today's day session. Along with the weather issues, extremely tight ending stocks and a very "optimistic" USDA estimated 162 bu. average are cause for enough concern to push us higher. I wanted to include one article from today's report that illustrates another aspect of this weather issue that I don't think most in the trade are looking at. I was chatting with one of our well respected readers, friend and grain analyst William Fordham from C&S Grain Market Consulting the other day via e-mail. Bill made some great points that I wanted to pass on. I included some excerpts from the conversation, hope you enjoy.
Bill wrote: Corn production in 2009 was overstated in the Midwest anywhere from 5% to 10%, depending on the area, the planting date and the maturity of the hybrids that were planted. I have two 48' diameter bins that each hold 40,000 bushels of 56# Test Weight dry corn to the eaves. In high Test Weight years, I have been able to get as much as 43,000 bushels to the eaves. In 2009, both bins were full to the eaves at 36,000 bushels! One of the reasons why WASDE has had such a hard time in estimating corn stocks on hand is because of their refusal in 2009 to adequately account for the low test weights. Yes, cool growing seasons can produce a lot of kernels of corn, but those kernels will not always be packed real tight. The tightness of packing the starch from the leaves into the kernels every night is determined by the temperature differential from the daytime highs to the nighttime lows. From my extensive experience in corn test plots and daily weather data collections from 1970 through 1998, it is my opinion that the optimum temperatures from Day 21 through Day 55-60, after silking, is for a daytime high of 86 degrees and a nighttime low at 54 degrees, thereby providing 20 GDD per day with a 32 degree temperature spread. It is the spread in the day-to-night temperatures that squeezes the starch into the kernels, packing the kernels tighter and tighter and tighter. The problem is we are now in the 31st month of Solar Cycle 24, and data indicates it is going to be a cold cycle! I doubt it is going to be very easy to increase the world production of grains in this environment.
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