The corn market has been in a steady state of sideways action. In January when John Payne, senior futures and operations broker and market strategist with Daniels Trading, was last on U.S. Farm Report to his most recent appearance in June, he says the market has stayed in the same spot. While it might not be happening now, there could be some higher price action in the future.
“Looking at corn for next year, December corn is priced suboptimally at $3.80, $3.85 [per bushel], but July of next year is up around $4.15,” said Payne. “Don’t look at the front month price—there’s some value down the curve.”
Jim McCormick, senior trading advisor and broker at Allendale, Inc., has customers who are frustrated, yet optimistic.
“You’ve got a crop that went in struggling in the eastern Corn Belt, planted twice, three times in certain locations,” said McCormick. “We got some dryness going on in the northern Plains, then you got the recipe for the market to move and move higher.”
There are still farmers with old crop in their possession. Payne’s advice to those is to not be the last one to move it.
“The buy side is going to be there and they know that the farmer needs to sell, and I don’t think they’re going to chase this market higher,” he said.
Because of the wet weather that plagued many farmers across the Corn Belt during much of the planting season, the acreage mix could be impacted. At Allendale, McCormick believes corn acres could be down 1 to 1.5 million acres, and that could play a bigger role down the line.
“You take two or three bushels off trend yield,” he said. “It’s going to tighten that balance sheet from about a 3 billion carry out to maybe a 1.8, 1.9 [billion bushel carryout]. That’s going to get the market’s attention.
Watch McCormick and Payne’s view on what the ceiling could be for corn in 2017 on U.S. Farm Report above.