Fireworks entered the market mid-week after USDA released its June Acreage report. While the corn stocks came in bigger than expected, USDA trimmed nearly 5 million acres off the 2020 acreage estimate.
While December corn futures didn’t hit $3.65 this week, Chip Nellinger of Blue Reef Agri-Marketing, says it’s still possible.
“If we come in here next week, and it's still hot and dry, I think the next spot would be the low $3.70s for December corn futures,” he says.
AgriTalk host Chip Flory thinks $3.70 is a realistic price target, as it would take more weather to fuel the market and push prices toward $4.
“People are asking, ‘OK, does this create a situation where we could see $4 print in Dec corn futures,’ and I don't think anything we know right now suggests $4 corn,” Flory says. “But if we get to the end of July and all the heat that is in the forecast has actually happened and we don't see those timely rains, then we can bring $4 back into the conversation, but we're not there yet.”
Nellinger says heading into the June 30 report, there were multiple factors at play that helped fuel the market, including a near-record short position by the funds. He says moving forward, it’s a about the weather.
“We're coming into one of these classic, long holiday weekends. There's no markets Friday, and it's all about the weather right now,” he says. “There's not much rain in the forecast with a lot of 90-plus degree temperatures, and there are some areas across the Corn Belt that generally missed the rainfall over the last week to two, so this is really shaping up to be all about the weather. Our volatility is really going to increase over the next few weeks.”
Flory cautions producers to remember what history tells us. He says a weather market a weather rally can fuel a market, but it can also be short-lived.
“If we have triggered those funds to step out of the short position, the next step is to try to give them some incentive to get long in this market, and that's going to take the weather to get the ticket traders and the spec traders long in this market,” he says. “There's no question demand would help. But it won't be able to do enough fast enough, like a weather scare would do for this market going into the end of July.”