Will Corn Test $7 Or Will It Return Back to $6?

This article discusses what market variables are contributing to current corn market fluctuations.

Jon Scheve
Jon Scheve
(Marketing Against The Grain)

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Market Commentary for 2/18/22

There are many factors that could impact corn prices moving forward.

Reasons To Be Bullish Corn:

  • Argentina crop conditions continue to deteriorate, and early estimates indicate yields could be 20% below normal
  • A decrease in Argentina production could increase US exports and tighten carryout
  • New crop bean values in the US and high fertilizer costs may buy some bean acres away from corn this spring
  • Rumors of China buying more US corn
  • Funds continue to buy corn and other commodities as an inflation hedge
  • US corn remains competitive on the world market

Reasons To Be Bearish Corn:

  • Brazil is forecasted to grow more corn this year compared to last year and the planting pace is well ahead of normal. Usually in Brazil corn planted earlier misses the dry weather seen during the later part of the growing season.
  • Argentina’s corn production last year was also predicted to be 20% down from normal, but ended up being down significantly less than that prediction
  • US export pace is not meeting current USDA estimates
  • Rumors of Chinese corn purchases have not shown up in the cash markets as actual sales yet
  • Total Chinese corn imports are expected to decrease nearly 30% this year compared to the record levels last year
  • Some in the trade are suggesting that feed demand in this country will not meet current USDA estimates

Other Factors That Could Affect the Corn Market:

  • The Russia/Ukraine situation is still unresolved, and the outcome is unclear
  • April and May weather in Brazil could end up affecting US crop demand in late summer
  • US weather in June and July will have a big effect on price direction later this summer

Bottomline:

With so many unknown factors that could change price direction, continued volatility should be expected.

Market Action:

On February 10th, an open order I had in place to sell March corn futures at $6.50 was hit. This order was 10% of my 2021 production and now makes me 70% sold with futures on my old crop corn.

Also on February 10th, an open order I had in place to sell December corn futures at $5.90 was hit. This was my first 2022 order and represented 10% of my expected upcoming corn production.

Want to read more by Jon Scheve? Check out recent articles:

Will South American Yields Be As Bad As Predicted?

Setting Bean Basis At The Highest Level Of the Year

How A Range-Bound Market Left Me With A Sale Above The Current Market Value

Will Beans Find Their Way To $14 Or Will They Trade Back Under $13 Again?

Why “Free” Storage Isn’t Really Free And Actually Hurts All Farmers

Are These Recent Rallies A Christmas Present Or Are They Sustainable Long Term?

Why Futures & Basis Should Be Marketed Separately. Futures May Hit $6 While Basis Could Increase 20-40 cents.

Jon Scheve

Superior Feed Ingredients, LLC

jon@superiorfeed.com

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