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| Tomorrow is the biggest USDA report of the year.
If you remember last year, it sent corn down over -30 cents and beans up nearly +80 cents.
Typically corn acres increase from March to June. Feels like that might not happen this year due to Mother Nature and the current market conditions.
So what’s the future for grains look like if we come in below the estimates and get a bullish report vs if acres come in high and we get a bearish report?
Looking specifically at corn. The first scenario:
Bullish report. Acres come in low, maybe stocks come in on low end.
Now this will provide an initial spark and could send us much higher. Doesn’t feel like it today, but we could see $5 corn. The only negative is that this would slightly kill our demand, and have a more negative impact on prices longer term.
Second scenario:
Bearish report. Acres come in high, maybe stocks come in on high side.
Short term this would cause some pain. Sub $4 corn would be a very real possibility. However a bearish report will longer term help us create more demand and eventually lead to higher prices. But it will likely take several months for the market to see some recovery, and it could be a brutal several months. Short term many farmers might not be in the good spot with the heavily depressed prices. So that’s scary for a lot of guys.
However, if we go lower it will create that much more demand. The lower we go now, the higher we are able to go later. And longer term I don’t think our production is going to be there. Which would create an even more bullish scenario long term.
Demand is already at a spot where we could have a record yield yet see our carryout decrease year over year. That is bullish.
Either way, you have to be prepared to see corn $0.50 to a $1.00 lower, or $0.50 to a $1.00 higher. You have to have a plan for both.
If you’re someone who wouldn’t be able to withstand corn being sub $4.00 or will have to make sales down here you have to be proactive. Have a plan.
For those interested, listen to todays audio where we go over everything to know ahead of tomorrows major report & how to position yourself.
Listen Here: https://txt.so/Iav78B | |
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Long term vs short term effects USDA report could have - market comments
