Corn Trades Both Sides of the Market
Sep 30, 2009
Corn was very active today, trading on both sides of the market. At one time we were up over 7.5 cents and then down 2.5 cents. Concern over crop maturity and how much influence we will have on the overall crop size due to a frost which is starting to develop in the northern Corn Belt.
More than likely I’m hearing the same stories you are. The corn crop in the west is better than expected but early yields in the east are weaker than producers are wanting. There is some talk about test weight problems but it’s still early. One of the concerns that is starting to grow is the amount of rain in the forecast over the next few weeks. Many producers are getting uneasy that this is going to be a tough and drawn out harvest. If this concern develops several things will occur:
- First, getting the crop out later than expected it may be difficult to get all the fall field work that producers want to accomplish.
- Second, the amount of wheat plantings could be down.
- A slow harvest will keep the basis from crashing and the spreads from exploding.
So the good news is we may find it very difficult moving December corn below the $3.02 level. The bad news is with the potential of a crop getting bigger as the crop moves along the upside potential is extremely limited.
Long term implication: Since the producer is very undersold in regards to this year’s crop and will be storing very aggressively it’s been my experience that the producer can not effectively sell the next year’s crop while the current crop is in the bin. If producers are not careful, they could be selling the 2009 and 2010 crop at the lower end of the price scale.
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