Are You Ready to Sell the Next Corn Rally?

July 21, 2015 05:00 AM
Are You Ready to Sell the Next Corn Rally?

All this volatility in the market is making Bob Utterback sound, well, a little bearish.

In the absence of reliable soybean planting numbers and widely differing field conditions for corn and soybeans, the Farm Journal economist and head of Utterback Marketing Services is thinking it’s time for farmers still holding old-crop corn to reduce their risk and sell some grain.

“We know the seasonality of the market from now until fall is definitely down,” said Utterback, speaking on U.S. Farm Report on Saturday. “The bull can’t get any traction because he can’t see the holes …. I think the crop is not getting worse. It’s probably getting a little better, and that’s not going to work to the bull (market’s) advantage, so if you’ve got old-crop corn that you haven’t merchandised, you need to get it moved. It’s just time.”

Mike North of the Commodity Risk Management Group agreed.

“There’s still some things out there that are going to be troubled water for corn going forward,” said North, also speaking on U.S. Farm Report. “The bottom line is, on next year’s crop when you see a rally of this magnitude, you absolutely want to start looking at getting some sales made. … You want to be selling last year’s crop if you still have it; this year’s while it’s in the field; and start looking at next year. These rallies are opportunities you want to capture.”

Listen to their discussion on U.S. Farm Report:

Weather continues to be key in this summer’s market movements as traders watch forecasts and USDA’s Crop Progress numbers. So far, crop conditions are holding up, at least according to USDA’s weekly report, which found that 69% of corn is in good to excellent condition, with 55% silking.

For some farmers, great potential does appear to be the case. “Last Monday—July 6—we received a great rain, which was just what the doctor ordered,” said one farmer in Nobles County, Minn., on AgWeb’s Crop Comments. “… Many corn fields have begun tasseling. Thus far, the crops in southwest Minnesota look great, and if we avoid weather disasters, record yields could be likely.”

Others are struggling with soggy fields that never seem to get the chance to dry out. “Seventeen inches of rain since Memorial Day,” said a farmer in Henry County, Ohio, on AgWeb’s Crop Comments. “Always heard a dry year will scare you, and a wet year will starve you, and it looks like a diet year to me.”

That spectrum of risks makes it even more important for producers to develop—and follow—a sound marketing strategy for their old crop, new crop, and next year’s crop.

“If we’re between $4.50 to $5 corn—which I think is a possibility in November-December—that’s when I’d be selling my ’16 corn post-harvest, but it’s going to be a December-January rally, which is going to make it extremely difficult,” Utterback said. “I can tell you right now (that) everybody’s going to talk El Nino. If the winter’s dry, everyone’s going to (talk about) 2012. Everybody’s going to be emotional. … I can hear everybody screaming, ‘Don’t sell corn because they’re going to have drought, and (the prices are) going to go to the moon.”

With that level of frenzy, “technique … becomes very important,” Utterback added. “If you can sell $5 corn and capture carry, you’re looking at an exceptional price for the spring of 2017 for your crop.”

What do you think will happen with corn prices this year, given what you are seeing in the field? Leave a comment below or share your observations and photos with AgWeb’s Crop Comments

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Spell Check

Chappell, NE
7/21/2015 10:58 AM

  I thought forever bearish Bob sold this crop years ago as he always does.

Andy Rentschler
Denver, IN
7/27/2015 01:22 PM

  I don't understand the falling prices with all of the damage. Illinois and Ohio had the rains too. I'm not selling until they figure the yeild loss. And most guys I talk to are not selling.

Dan Weinert
Saint Paris , OH
7/21/2015 07:30 AM

  I've been across several hundred miles in Ohio and Indiana and the crops I've seen look horrible. There's pockets of nice crops but from what I've gathered from other farmers the crop conditions are a lot worse than what the USDA is letting on. I've seen fields of corn 5 feet tall, tasseled, and solid yellow. We've seen thousands upon thousands of acres still under water in Ohio and Indiana. I think crop price will be a lot higher than expected once the numbers come in.


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