I'm questioning both the USDA yield estimate and old crop Corn.
May 14, 2013
Corn traders will now start to aggressively question the USDA's 158 bushel yield estimate. I have to assume the USDA was thinking we would be at or around 60% planted by May 15th. With this clearly not being the case... The question is what now happens to the new-crop yield number?
Even though the May Corn has gained handsomely on the July, and the bull-spreads have paid good dividends the past several months, I am not so certain I like the thought of staying bull-spread the old-crop. With the fund roll being something to consider moving forward you have to ask yourself if they are really going to be eager to roll into a old-crop vs. new-crop spread. As of late the funds have not been too keen on playing old vs. new crop game and with new-crop yields in question and a possible game changing type report at the end of June I am just not sure the risk-to-reward makes a lot of sense. Yes, old-crop corn supplies are tight, but as with many things in life, overstaying your welcome can often be a costly mistake. From my perspective, producers with old-crop bushels should be moving bushels on any and all rallies or additional strength in the basis. Producers should have good coverage in place and risk reduced on new-crop bushels. A rally of some sort into the June 28th USDA Grain Stocks and Acreage report might be your next selling opportunity. Keep in mind there is also a USDA Supply & Demand report out on June 12th.
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