The U.S. corn harvest is now entering its final stage when all the bins on the farm are full and cash grain has to be dumped at the local elevator. We see no change in the basic belief that yields will be increased in next week’s supply/demand report.
At the same time, we expect USDA will suggest strong exports as justified by the recent strong export pace. It appears the bear has the most power over the market going into the report. We would not be surprised to see a bearish report and positive reaction.
However, we strongly suggest that only a modest rally will be seen [during November] when the bin doors shut. Our concern is the lead month lows could still be seen in the first quarter of 2014 as farmers make cash flow sales to make annual payments. Bottom Line: We would be a scale down buyer of lead month corn from current levels to low $4’s, and a scale up seller of lead month corn at $4.50 to $4.60.
We realize the flat price range is very tight; subsequently the real action will be in selling calls and puts for premium value decay against the Mar or May contracts. We would also look at the bull spread. We suggest the market will not get excited about buying corn for a weather market potential until it gets well into April.
Bob has come out with his 2014 marketing plan to give our clients his projections for next year along with recommendations as to how to increase profit margins for next year. If anyone is interested in receiving a copy, call our office (1-800-832-1488). If you have questions, ask them and we will try to answer them each week on our blog, Email questions to [email protected] or [email protected].
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