Could We See a 75-Cent Rally in Corn?

Could We See a 75-Cent Rally in Corn?

If you’re looking for a bullish perspective on corn right now, Mike Florez of Florez Trading is your guy.

“I know there’s a lot of supply out there, but the markets are going to be shifting from what we produced in the past to what we’re going to produce now,” said Florez, speaking on U.S. Farm Report. “Because the funds are short, that should give us a pretty significant rally probably through the end of May. I would expect a good 75-cent rally in corn.”

That would be a welcome development for farmers worried about the cost of production this year. As of Tuesday morning, May corn futures were trading at $3.926, a gain of a few cents since the open.

How can farmers take advantage of such a rally, should it occur? “If you’ve done any selling on your new crop, I would cover that with calls right now, because I think the market’s going to go higher,” said Florez. “I think you’re going to get a chance to sell higher.”

Hear his comments on U.S. Farm Report:

Florez recalled the power of the funds last fall.

“I think the market’s made their lows in October. We had a 60-day rally,” Florez said. “If you look at the commitment of traders report at that time, the funds are as short as they were then. When they decided to cover, it took a period of time, and you got a 75-cent rally in corn, about $1.60 in soybeans and about $1.80 in wheat. I think that’s what going to happen again.”

He added: “Everybody’s short grains, everybody’s long dollar, everybody’s short crude, and it’s all going to get unwound,” he said. “The markets are going to move up, not based upon fundamentals, but based upon money flows.”

Listen to U.S. Farm Report's "Markets Now" segment:

As farmers do their best to maximize their new-crop marketing, though, they must still manage their old crop, which likely adds up to a considerable stockpile of corn.

“The theme we’ve picked up consistently across the Midwest is that there’s a larger than normal percentage of old-crop corn yet to be sold here for the 2014 crop,” said Brian Basting of Advance Trading. “What we’re encouraging producers to consider is getting control of those 2014 bushels, and then you can put your entire focus on 2015. There’s a tremendous amount of equity at stake there.”

What are your corn price expectations? Talk markets with fellow farmers on the AgWeb discussion boards.

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Spell Check

Greensburg, IN
3/25/2015 03:25 PM

  Contradictory speeches. More corn out there yet we're going to rally .75 cents? I guess the World Farmers going to sit still on his hands until he get his .75 cents. You have to ask yourself why will the funds get out after just getting short without some supporting fundamentals or technical reasons. It does seem they have terrible timing to get short at this time of year. But I thought the same thing back when the got long beginning of October. As always timing will be everything.

Ackley, IA
3/25/2015 04:13 PM

  I've learned to never say never. Markets are unpredictable. Funds were actually shorter as of March 17 (most recent data) than they were last fall. But we've seen a nice short covering rally over the past week pushing corn up more than 25 cents. I'm still bearish but I'll keep and open mind. We tend to underestimate volatility in both directions and that gets us in trouble.

Ashland, OH
3/25/2015 07:54 PM

  good comment Bulldawg same for me


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