What does one do with old crop corn?
Aug 18, 2010
I’ve been on the road this week, speaking to New York corn and soybean producers. I have to say the drive up from Indiana was a very beautiful drive. The corn and bean farmers in Northwest New York are going to have some of their best yields in several years. Again, I want thank all the producers who attended the NYCG Summer Crop Tour for their generous hospitality and welcoming me to New York agriculture.
As for the markets, the corn and bean complex are slowly creeping back to the recent highs made last week on the wheat market surge. Overall, the attitude for long term bullishness is building that demand to be very strong. The end users overall are getting worried they have missed the boat.
As one producer asked me today what do you do with old crop corn trading currently at $4.50 in the cash market? My response went like this. While I continue to feel there is grounds for some technical weakness into the harvest time period, the level of the correction is going to be limited. My fear is growing that December 2010 corn will find it very difficult move below $4.00 for any length of time if we confirm in the September supply demand report that yields are sliding lower due to the hot and dry conditions in August for some corn and bean producers.
Subsequently, I have to suggest the odds are better than 60/40 that the corn market will eventually move very close to the $4.50 level in the December time period. Therefore, at this time unless you need immediate cash flow, I would defer selling any remain corn until the after the Thanksgiving, but before the Christmas, time period.
In regards to beans, we are equally nearing some very important resistance levels. I can not express the importance of the next five to eight trading days. The longer the bulls can hold things together the greater the odds the market will be able to breakout of the current trading consolidation. A close in November beans above $10.50 should trigger a short term move to $10.75. If the momentum can be maintained above this level then a major bull market would be suggested. The only way I believe the market can be this aggressive is the overall yield has to start declining towards the 42.4 bushel level. I unfortunately, don’t expect this major of revision in the number until we get well into the October supply demand report.
In summary: if you’re hoping for a major bull market to develop between now and next spring I have to say it would be in your best interest for this market to not get “too” overhead this fall. A correction of say 1/3 of the recent rally in beans and corn I believe would make it much healthier for a long-term bull move.
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