By some estimates, funds recently have pulled upward of 80,000 contracts off the long side of the corn market, says Chip Flory, editorial director, Pro Farmer. But that doesn’t mean corn prices are going to keep heading lower.
“Now we see, how does the market recover?” explains Brian Grete, editor of Pro Farmer, in an interview for “AgDay” TV. “We get to the June 30 reports, then we have the Fourth of July, then we’ve got summer weather. Where does that take us? History says that when you have these sharp pullbacks after a big move up, you’re probably going to retest those highs at some point in time in a weather market.”
It doesn’t help this past week featured a mix of factors including moderating temperatures and rolling rains across the Corn Belt. That could all change, though, if temperatures heat up.
“I think short-term we could see even more of a pullback here if the funds decide to get out of more long positions and lighten up a little bit more there—or a lot more there,” Grete says. “From thereon, though, if those long-term forecasts are accurate and we do see the above-normal temperatures, that is potentially damaging to corn yields and as a result we could see some upward price movement.”
Summer price volatility is “probably going to be close to off the carts,” Grete predicts, and $5 corn remains a possibility under the right set of circumstances.
“You push above $4.50, you get an upside breakout above there, and now you’re talking about the potential for $5 [just on the fund money getting long],” Grete says. “We may see a similar type of situation happen as we did near $4.50 if we get to $5.”
Click the play button below to watch the complete interview with Grete.