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$6 new crop corn indeed -- can we see $7?

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A friendly USDA report paves the way for higher prices.

Last week I wrote about the implications and importance of the June 30th Quarterly Stocks and Planted Acres report for corn prices. Would the report show negative news and send corn futures lower toward $4.50? Or would there be a bullish surprise and send prices higher back toward $6?

We now know that answer, and higher prices are definitely in order.

Planted corn acres less than average estimates

The June 30th Planted acreage report pegged planted corn acres at 92.7 million acres, up from the March 31 Prospective Plantings Report pegged corn acres at 91.1 million acres. However, heading into the June 30th report, the industry was looking for an increase of U.S. planted corn acres closer to 93.7 million acres. The acreage number released was MUCH below the average industry expectation, which was why corn futures rallied. 

Quarterly Stocks equally as important  

The quarterly stocks numbers were friendly, too. According to the USDA, “Corn stocks in all positions on June 1, 2021 totaled 4.11 billion bushels, down 18 percent from June 1, 2020. Of the total stocks, 1.74 billion bushels are stored on farms, down 39 percent from a year earlier. Off-farm stocks, at 2.37 billion bushels, are up 11 percent from a year ago. The March - May 2021 indicated disappearance is 3.58 billion bushels, compared with 2.95 billion bushels during the same period last year.”

This confirmed my suspicions that farmers had sold much of their old crop corn, as I had indicated last week, and end users are holding on to a good portion of those bushels. But the bottom line, is that overall, those quarterly stocks are significantly lower than year ago levels thanks to strong demand.

Seasonals

One last item to be aware of. As many of you know, one of the best windows of time to traditionally sell grain occurs annually between June 1 and July 15. Specifically, the market traditionally offers one last little glimmer of price selling opportunity in early July due to a combination of USDA reports and hot summer weather forecasts as the corn crop heads into pollination.

Most years, the July USDA WASDE report dims the light on the summer “last hoorah” for prices, and prices have a tendency to then drift lower.  2012 was the exception.  Barring any dramatic July weather, be aware that the early to mid-July time frame is a good opportunity for your next round of cash sales.

$7 new crop corn?

I think it safe to say a record national corn yield is not likely due to the crop stress in the Dakotas. But, with the recent rain much of the Midwest has seen, you cannot say for sure that yields will crash lower either.

The next USDA WASDE report will be here soon, on July 12. It will likely show smaller ending stocks thanks to the June 30th report data. Looking back, the June WASDE report pegged national corn yield at 179.5. That is likely too high. Using today’s acreage number, June WASDE report demand numbers, and 176 yield, ending stocks for the 2021-22 crop year would be at 1.239 billion bushels, down from 1.357 in the June report.

Traders will watch weather reports even more closely now than in prior weeks. Add in a three-day Independence Day holiday weekend and get ready for more volatility ahead!

Is $7 December corn futures possible? After today’s report, it very well might be. Looking at a continuous weekly chart of December corn futures, there is a gap yet to be filled on that chart (from 2012) which points to $7.05 as a technical possibility.

 

 

Reach Naomi Blohm: 800-334-9779 Twitter: @naomiblohm   and [email protected]

 

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