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Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Corn trade continues to digest NEW record yields being harvested by many producers in the Delta and Ohio River Valley area (specifically southern IL, IN and northern KY). This talk is obviously keeping many of the larger traders leaning over the short-side of the boat. Their contention is, even though current supplies are extremely tight, a 13.8 to 14.1 billion bushel crop is just around the corner. Lets also keep in mind many of the larger money-magers believe current USDA demand numbers are over-stated as well, especially exports. Most well versed S&D experts will tell you, since global inventories have grown, and most of the foreign exporters have limited storage space, they will be much quicker than US suppliers (with ample storage) to lower prices in an attempt to move supply. Meaning once again, our inability to be the worlds "low cost" provider will ultimately weigh on demand. This logic is hard to argue and has the bears thinking exports are still overstated by some 200-300 million bushels. Personally I am NOT as pessimistic or as bearish as most... I am not saying I have become bullish, I just think additional downside pressure may be short lived. Below are my Top-10 reasons:
11 . Brazil just went of two years with a super super second crop harvest. Total corn in Brazil used to be around 50 million metric tons, last year 75, this year 80 million tons, luckily helping suply in north americas dry year. Brazilian second crop is very sensitive to lack of rain (that is the normal situation). If conditions go back to normal, I think brazilian corn crop can go back to the 50 or 60 million metric tons what is just enough for domestic demand.