Corn producers seem somewhat stumped by the continuing downhill price action, especially considering the ongoing rain and cooler than normal temps. The trade however seems to be looking past the current U.S. weather concerns, and is banking on the U.S. producers' ability to get the crop in the ground.
In typical fashion, I am starting to think the market could be getting out over the tips of it's skis just a bit. Meaning we could be getting a little ahead of ourselves to the downside in new-crop. Yes, I certainly understand the longer-term supply and demand side of the equation, along with the implications associated with a 150+-bu. crop and sub $4 corn. The concern however that I currently have is that a large majority of the crop is still sitting in the bag, and there are a ton of weather related wild cards being added to the deck each day.
I am certainly NOT saying to lift any hedges or re-own previous cash sales, but investing a little revenue in some type of bullish "short-dated option" strategy (just-in-case) might be a smart play (see yesterday's "Special Report" for more details).
Producers however should be careful getting all bulled up simply on the planting delays. Keep in mind, back in 2009 we were only 5% planted at this juncture and ended up with the highest ever national yield of 164.7 bu./acre. A yield anywhere near that this time around would produce a crop of more than 14.5 billion bushels and an extremely burdensome carryout closer to 3.0 billion bushels. You don't need me to tell you where corn prices will be in this scenario; sub-$4 is almost a guarantee. In 2009, with just over a 13 billion bushel crop, prices in September fell to below $3.00 per bushel. Point is IF we get a weather related rally, be smart and use it wisely!