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Market Commentary for 4/28/23
Which Direction Will December Corn Prices Go?
This is the million-dollar question everyone wants to know. Unfortunately, no one knows the answer because the biggest driver will be July weather and rainfall. Since no one can predict the weather accurately beyond 1-2 weeks, it is impossible to predict future prices for this fall.
For example, the following chart compares the current December corn market with the December contracts from 2012 and 2013. So far through April, prices have been pretty comparable for all three years.
For 2012 and 2013 this price consistency continued through mid-June. However, in late June there are dramatic differences. In 2012, dry weather forecasts started and continued into July throughout most of the growing areas. Conversely, in 2013 timely rainfalls in July led to mostly trendline yields throughout the corn belt.
Moving forward prices for 2023 could follow either 2012 or 2013 depending on several unknown factors:
For a repeat of 2013:
- The majority of crops need to be planted on time
- Total planted acres need to be near the March USDA predictions
- Timely July rains will be needed to produce near trendline yields
For a repeat of 2012:
- A major planting delay or reduced total planted acres
- Widespread dry weather in July
When you add the unknowable global factors like the Ukraine war or political issues it is impossible to predict with certainty price direction 6-12 months from now.
Bottom Line:
If someone could predict the weather, they could better predict prices. Since that is unlikely to happen any time soon, there will continue to be uncertainty and price volatility in the market.
Want to read more by Jon Scheve? Check out recent articles:
Can Corn Rally Back? Plus How to Add 30 Cents to Some Corn Sales
Spreads And Basis Suggest Old Crop Corn Futures Values May Be Too Low
The Market Will Be Focusing On Planting Pace In The Dakotas
If Corn Acres Are Reduced It Does Not Automatically Lead To More Bean Acres
How Important Is Each USDA Report?
Did Old Crop Corn Finally Hit A Floor Price?
Jon Scheve
Superior Feed Ingredients, LLC
