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| Garbage USDA report that led to corn seeing one of the biggest losses in a year.
It wasn’t the numbers themselves, but more the fact that it took forever for the report to come out. All the algos had it.
When it did come out, corn acres and stocks came in higher with acres at 91.5. This tanked corn and July & Sep corn traded below $4.00
The idea was today’s numbers increased carryout. However going into July, August, Sep I see that decreasing.
I don’t think yield is 181. With all this water, floods etc. our harvested acres are probably going down.
Obviously this report was very negative for corn on the surface. But one thing we did do today was create more demand.
If you dig in deeper, demand is getting stouter and stouter. Yield is debatable but I don’t see anyone calling for 181. I think it could be tough to match last years yield.
Today’s report sucks for prices today. Prices could suck for a while. But this helps prices go higher later. Because it helps create more demand.
This is why I see a possible counter seasonal rally. We could even rally into harvest. If this happens it’ll be a demand led rally, which is a rally that actually lasts.
The risk is of course that rally doesn’t come and this is a repeat of a year like 2014. If you’re someone who can’t handle corn sub $4.00 or if nervous that’s where we are headed.. be proactive. Lock in a floor.
It’s tough to market in a year like this one. We haven’t even had the opportunity to make a sale above break even for most guys.
The funds are so massively short. Record amounts for this time of year.
We don’t have this crop in the bin yet. Nobody has a clue what the crop is gonna look like. What we are doing is.. the lower we go the more demand we create.
What happens when you get more demand? You get higher prices.
I don’t see a lot of farmers puke selling. We have prices below the cost of production. The charts are saying we are overdone.
This report isn’t going to help us soon. It is going to feel like the sky is falling for a while. But looking longer term our demand could very well lead us higher and create a counter seasonal rally.
Nobody is talking about demand right now. But it’s there. China is sniffing around for corn. Just look at prices in Chinas corn market vs ours.
The USDA says that the farmer is holding 3 billion bushels. Is the farmer actually? If so basis indicates it’s not for sale anyways.
These flooding acres haven’t made any impact to the market yet, but longer term they will. A headline of rain in June is always going to push the market lower.
For those interested, in today's audio update we talked more about this, main takeaways from the report, how we could see a counter seasonal rally, and some other stuff. Can listen here: https://txt.so/hBeiuH
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Todays report sucks, but will longer term help demand and prices
