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Corn+Soybean Digest

Lull continues in corn price movement

With December corn futures stuck in the range of $4.05 to under $4.20 per bushel for nearly a month, it appears markets may remain in a lull until the March 31 USDA Prospective Plantings report, say marketing analysts. But a leading university grain marketing economist encourages farmers to be ready to pull the trigger when their target price is reached.

“Have a number, a price at which you’re willing to get some 2015 sales on the books,” says Ed Usset, University of Minnesota grain marketing specialist. “Keep it simple, straight forward contracts or simple sales of futures contracts. Options give you upside, but with prices below production costs, I have no appetite for spending more money on dreams.”

December corn closed Friday at $4.04. The last time it hit $4.20 was Feb. 19. Old-crop May ended the week at $3.80½.  Bret Crotts, analyst for Schwieterman, Inc., sees little change in corn prices for a few more weeks. “The corn is still trading sideways,” he says. “Since we didn’t get much movement after the supply and demand report (earlier last week), it looks like this market is remaining stuck in this pattern until we get to the Quarterly Stocks report and Prospective Plantings report at the end of the month.”

What happens then is unknown, since there’s no guarantee that corn acres will largely decline due to expanded soybean acres. Bryce Knorr, senior editor Farm Futures, says only “modest rallies at best are anticipated to ‘buy (corn) acres’ this year. He warns that “overhang from a bearish soybean market could spell trouble for corn – so continue to price inventory on rallies.”

The increased U.S. dollar value may have a bigger impact on grain exports, notes Brugler Marketing & Management. Also, U.S. corn export commitments “are 79% of the full year forecast, slightly ahead of the five-year average of 77%,” Brugler reports.

“This is despite the 50 million bushel hike in the full year number on Tuesday.” Increased China demand for U.S. sorghum is apparent in old-crop sorghum, where commitments “are already 103% of the full-year USDA forecast,” Brugler says.

If these and other conditions hold corn prices down, Usset see farmers again leaning toward storing much corn this fall. “Like last year, they are waiting for higher prices,” he says. “But they can only store 2015 if they move the 2014 crop off the farm and open up storage.”

TAGS: Corn
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