Why I'm holding off pricing new crop corn?
Jun 05, 2013
Corn supply estimates, in my opinion, have to start being tapered bad. Planted acres look as if they will be trimmed back by 3-5 million, and yields will more than likely be moving lower. My gut tells me "harvested" acreage will eventually end up being somewhere around 86 million. In addition the 158 yield currently being estimated by the USDA seems to be more like 155 or possibly even sub-150 on continued moisture problems in key producing states like IA, MN, IL etc... Bottom-line, despite bearish talk of China finally purchasing Argentine corn, the bird-flu virus hurting demand, Brazil producing another record crop, Ukraine supplies being much more competitive, and so on, I am going to continue staying in a "holding pattern," opting not to price any additional new-crop bushels until more cards are dealt from the deck.
Right now, and for the next 60-days, I think it is ALL about US "weather" and "yields." With 45% of our cash sold and revenue insurance in place, I feel comfortable calling all bets in order to see a few more cards. I would actually move to an even more bullish bias "IF" the corn market could find a solid "demand" story. Below is a simply guide to where I think prices could go according to yields. Keep in mind this formal hinges on harvested acres falling to 86 million. Yields are listed in ranges, Example: a yield in the 150 range will more than likely keep prices between $4.50 and $6.00 depending on what end of the range yields ultimately fall. Hope this gives you a little better roadmap.
- $8.00 (+) = 86 mil acres @ 120's bpa = 10.3 to 10.9 billion bushels
- $7.00 to $8.00 = 86 mil acres @ 130's bpa = 11.2 to 11.9 billion bushels
- $6.00 to $7.00 = 86 mil acres @ 140's bpa = 12.0 to 12.8 billion bushels
- $4.50 to $6.00 = 86 mil acres @ 150's bpa = 12.9 to 13.6 billion bushels
- $3.50 to $5.00 = 86 mil acres @ 160's bpa = 13.7 billion to 14 billion plus
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