Corn prices have been the poster child for trading ranges. Daily contracts have held all spring, and the pattern on the nearby has persisted all of 2017.
But if historical trends are any indication, those ranges won’t last long. Decision time is just about here for the corn market.
Old crop normally is first to blink. In normal years, July futures makes new lows around Memorial Day. While demand remains good, the surplus from the record 2016 crop would in a typical year provide the nudge to take July lower.
Farmers waiting for a weather rally to sell got their chance and wasted no time unloading some old crop corn last week. But while the clock ticks loudly on the 2016 marketing year, it’s far from clear whether the bell has also tolled for new crop.
The good news is that July futures are following the trend typically seen in strong years. That may still not be enough to push old crop over the top however. The bullish seasonal typically tops out by the end of this week.
While this leaves old crop prices uncertain, it does at least hold out some hope for new crop prices. July 2018 came a few pennies from my initial hedging target last week. Target or not, it’s time to get some sales of 2017 corn on the books, just in the market can’t muster a move to truly profitable hedging levels.
There are two ways the move higher could play out. In the short run surge now is all about weather – a sharp drop in crop ratings, for example, or forecasts for a return to hot dry weather as pollination nears. Fundamentals still show a potential selling range from around $4.35 to $4.75, though carry to July 2018 may be needed to get there.
For the complete version of this outlook, including supply and demand tables and graphics, along with price charts, click the “Download” button below.
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Senior Editor Bryce Knorr first joined Farm Futures Magazine in 1987. In addition to analyzing and writing about the commodity markets, he is a former futures introducing broker and is a registered Commodity Trading Adviser. He conducts Farm Futures exclusive surveys on acreage, production and management issues and is one of the analysts regularly contracted by business wire services before major USDA crop reports. Besides the Morning Call on www.FarmFutures.com he writes weekly reviews for corn, soybeans, and wheat that include selling price targets, charts and seasonal trends. His other weekly reviews on corn farming, basis, energy, fertilizer and financial markets feature price forecasts for key crop inputs. A journalist with 38 years of experience, he received the Master Writers Award from the American Agricultural Editors Association.
For more corn news, corn crop scouting information and corn diseases to watch for, follow Tom Bechman's column, Corn Illustrated Weekly, published every Tuesday.