Should We Expect a Spring Rally in Corn?
Mar 28, 2017
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Last year the March 31st Prospective Plantings report was rather bearish for corn. The trade was expecting corn acres to drop to near 90 million but instead the USDA’s survey projected 93.6 million acres. Corn responded immediately with lower trade, but in the following days corn found some footing and started to rebound. Will this be the case again this year even if corn acres come in higher than expected again?
Similar to last year the trade is expecting a sharp decline in corn acres in favor of more soybean acres. And, while the argument this year may be more compelling than it was last year I wonder if the trade might be disappointed again. Either way it certainly was impressive that corn was able to shrug off the negative news relatively quickly and turn higher. I also wonder if corn can do something similar this year.
Given all of the things we know about the corn market right now I am not terribly bearish corn, even if acreage were to come in a little higher than trade expectations. Demand has been good at lower prices and globally there is a movement toward fewer corn acres. The adage “low prices are thecure for low prices” might be in action in the corn market. However, I think it is very important to understand last year’s spring rally in corn in order to set expectations for this year.
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Last year there were a few weather forecasters that were all excited about the potential weather for the US growing season. One in particular who was touting sharply higher prices in corn. Either way the weather guys…