By: Bob Utterback
, Farm Journal
Bob Utterback has more than 26 years of experience and offers producers a disciplined approach to marketing.
Corn is Waiting for Consolidation
Sep 23, 2010
The market seems to be reaching a price level where demand is expected to start showing signs of rationing. I expect ethanol will be the first commodity to show resistance to higher prices. Based upon production statistics we did see some drop in production last week. As for exports, I believe the difference between Chinese prices plus transportation is now getting close to even money. The issue now is how much higher will Chinese officials allow corn to rally domestically.
It is my opinion for corn to move higher we will have to see solid confirmation that corn yields have declined below 160 bu./acre. This is what the trade will be looking for in the October USDA Supply and Demand report.
Right now, there is a building group of end users and speculators, who are going to be very aggressive buyers in the lead month corn between $4.80 and $5. I have to say the downside risk in old crop corn is limited at this time. Therefore, if you have any remaining old crop corn in the bins, one should continue to be a slow seller.
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