What are the funds and the USDA likely to do with Corn now?
Aug 07, 2013
I have heard several analyst and marketing advisors who have very little if any 2013 and zero 2014 sold or hedged for their clients tell them that the crop is not going to come in as big as most are now forecasting. Some claim they have taken crop tours by air or conducted their own independent surveys, etc... I am not going to call anyone a liar, but I will say following this type of so called "risk-management" is an extremely risky move. Even IF they are right and the crop comes in around 155 bushels rather than 160 or 165 bushels, we are still talking about a near 2.0 billion bushel carry. Understand when I tell you, once the funds and large specs get their hands around the throat of a market, it takes very large unexpected, almost startling news to get them to let loose. From my perspective no one is going to be overly excited about corn until the carry out gets down closer to 1 billion bushels, which at this point seems like a million miles away. Sure you will have your occasional bullish headlines that might prompt a few of the weaker shorts to bank profits, move to the sideline, rest a bit before going back for the throat. But from what I have seen in years past, it is going to take some very serious news to get these guys to change their pattern of abuse... Sorry, but a yield in the lower 150's is NOT going to make them flinch! As I have been relentless perching, be extremely careful getting yourself too deep into the forest that you can't actually see the trees.
*One little inside tip to consider, the "final" US corn yields very rarely tend to fall in any major form or fashion from the USDA August report estimate. Respected source, Rich Feltes reminds us that last years final yield of 123.4 bushels per acre was the exact same as what the USDA had forecast back in their August report. Just trying to reiterate the fact, though there is always a slight possibility we drift lower, it is doubtful it will be nearly enough to excite the bulls or cause the bears to release their death grip on the trade.
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