The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Dustin works with a wide net of large producers throughout the Midwest. His analytical market approach and objective hedge strategy development is specific to the needs of every individual.
It was another strong day at the CBOT with December corn leading the way. The sharp rally started during the overnight session and accelerated after the midday GFS model was released. The model has a high pressure ridge developing for much of the Midwest next week. The changes to the midday model started the rally and the higher prices triggered some stop losses, extending the rally even further. The forecast needs to be monitored closely but at this point the risk premium added may be on the high side again, especially with the upcoming WASDE report.
Thursday’s report will be significant for the fact that the USDA will be using the updated acreage estimates from the June 28th report. The latest estimates have corn acres pegged at 97.379 million planted and 89.135 million harvested. The June WASDE report had yield down to 156.5 bushels per acre due to the late planting. If they leave yield unchanged total production should be 13.949 billion bushels, but there is a chance to see a higher yield since the crop ratings have been improving. I have included the table of analyst estimates from the Reuter’s poll below. The market expects corn carryout to be 1.896 billion bushels in the US. Many of these estimates are using the USDA demand numbers which we still believe are too high given the current prices. It’s not that we believe it is impossible to reach these corn usage levels but it would have to be from a lower new crop corn price. We still have to get through pollination with average weather but as we get closer to harvest the market should be working out more risk premium as it shifts its focus back to demand. Many revenue insurance policies will start to kick in as prices get lower. The idea is to at least get price protection from current prices down to whatever level the insurance will kick in. This depends on your (or your County’s if using GRIP) yield. Keeping a realistic estimate of where this level is may help you become a better marketer as you decide how much coverage you need in other areas of your marketing plan. As always we don’t know what’s around the corner for weather and we want to make sure we will be OK in any yield or price scenario so going over these in AgYield is our number one recommendation. Please contact us if you would like to see your current marketing plan in AgYield. Have a great week!
ANALYST ESTIMATES FOR THE JULY WASDE REPORT:
All Wheat Production
2.015 - 2.140
USDA 2012/13 US Grain and Soybean Ending Stocks
Avg Analyst Est
USDA June 2012/13 end-stocks est
0.537 - 0.800
0.104 - 0.135
USDA 2013/14 US Grain and Soybean Ending Stocks
USDA June 2013/14 end-stocks est
0.566 - 0.690
1.618 - 2.338
0.164 - 0.329
USDA World Production
June USDA 2012/13 est
May 2013/14 est