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Last Friday the USDA released the Stocks and Acreage Report and after the report was released the corn market reacted very poorly. One thing to keep in mind is that the markets are run mostly by the Funds. The people who control those funds do not live in the greater area of agriculture production. Therefore, they take the report as complete truth and react to it in that way.
Upon its release, the acreage report for corn was the biggest factor influencing the market. The USDA estimated there would be approximately 3.663 million more acres of corn planted versus their estimate in December 2018. This would add millions of bushels to our carryout. After the report came out, there was a lot of objection heard from producers to the acreage number. I did some research and found out that the USDA has a Twitter feed. On this feed, a representative from the USDA was answering questions people have about the numbers in the report. Of course, one of the first questions was, “How could the USDA predict that many corn acres when we’re experiencing a major flooding event and almost 100% saturation in the soil?”. The response was that the poll was taken from producers before the flood started, therefore none of the numbers take that into consideration! Obviously, the effect will have impacts on planting but new numbers won’t be released until after planting.
One thing to keep in mind as tractors start rolling and planting begins is that the market has plenty of time to correct this acreage estimate. This could come anytime between now and mid-summer. One way to capture rallies in the market (both now any anytime!) is to utilize cash offers. When setting a cash offer, you provide the strike price, bid month, and bushel amount. A cash offer can hit any time the market is trading day or night, triggering only when your requirements are met. Once triggered, a priced contract is generated. Cash offers can be entered for both old and new crop. As always, you can stay up to date with market prices by receiving our grain bid text messages. To enroll in this free service click here. So as you begin working in fields and planting your crop, keep optimistic that things will come back and correct themselves after the fallout due to this report.
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