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Corn Continues Trend Down in Anticipation of Acreage Report

Published on: 15:53PM Jun 29, 2010
The December corn market has now lost 41 cents in the last six days. This is finally getting producers’ attention. There still is a lot of old crop corn to move and producers know that the time is quickly closing for a summer bounce.

Tomorrow we will get a final acreage estimate. My expectation is very much in line with most in the trade. Some growth in both corn and beans but more than likely no more than 1 million acres total increase. When you take into consideration the amount of rain damaged areas, the overall productive crop acres is not going to exceed much above the initial March estimates. The problem is, with corn yield on good acres averaging above 163 bu./acre and beans above 41 bu./acre, we will have enough supply?

So, it really comes down to demand growth. How aggressive will China continue to buy? When will the EPA increase ethanol blends? Will livestock production stay constant? Essentially, none of these demand issues can be resolved short term.  Subsequently, the seasonal pattern of weakness into July as the corn crop completes population is still expected. My expectation is it should be difficult getting December 2010 corn below $3.20 but the basis will widen which will overall cause cash values to move well below $3 at harvest.
In summary, the window is quickly closing for any cash sales. If you can, you need to be making plans now to store all corn harvested this fall all the way into the Spring of 2011. If you have old crop corn, the trend is lower so bite the bullet and get it moved and then look to reown in August to September.
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