Markets are mixed this am with old corn up 7, new corn down 5 and soybeans down 10. Yesterdays report was a shock to most, but when you look deeper into the numbers the corn market is about 50-60 cents too high given the final stocks number.
Most were talking about the yield yesterday for the big rally, but that answer is actually the stocks report for corn. It should have been one of the most bullish stocks reports in the first quarter, and that was proven true yesterday. Last year the Dec 1st stocks report was 11.327, keep in mind there were 20 million acres of prevent plant acres of corn, and less than stellar yields. The average trade estimate had this stocks report coming in at close to 12.000 billion bushels. The actual number can in 650 million bushels below at 11.322 billion bushels. Poor crops, prevent plant and the largest first quarter export program of all time got us to here. There will not be a quarter going forward with this much disappearance, shipping and using the crop this fast. Exporters will not like the price jump, and probably buy only what they need. Ethanol is going to have a really tricky time with margins, grinding corn into summer. This looks like another slow down scenario for ethanol like we have seen several times over the year. Bad economics, bad weather, and demand out of China have put the US in a position of overall low grain supplies.
Bottom line = Don’t expect these prices to be sustained as demand will disappear quicker than it came.
Have a Safe Day!