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How big can the crop get? This is truly the million/billion dollar question. With the weather the Corn Belt has been having, we are hearing of some fantastic corn yields. There’s been a number of 170 bu/acre and one broker was talking about 174 bu/acre which would be three bushel better than the 2014/15 yield. Keep in mind, that year we had a corn crop of 14.216 billion bushels and it jumped the ending stocks by 500 million bushels. The USDA July report had a 168 bu/acre yield and a corn crop of 14.540 billion bushels with ending stocks at 2.081 billion bushels. Now, if you add just two bushels to the yield, the ending stocks grow by 173.2 million bushels and a 174 bu/acre yield; adding nearly 520 million bushels to the ending stocks.
Regardless of the yield, we are in position for a big crop. So, what will cause a rally of any magnitude in the next year? Are the current prices actually pretty good? The good news is, the U.S. is competitive at exporting all grains right now and this will help on the ending stocks.
Then there are the Funds; and their volume of cash that can move in and out of the market. This makes for some interesting market movement. They are currently a bit short in corn and long a few beans but with the economy, they may want to stay in grains; yet they are just so unpredictable and not something you would want to bank on.
Now may be a good time to look at next year’s crop and considering sales. As sad as it is to say, these may be good prices if we continue to have a big carryout. If you start with an Average Price Contract for 10 to 20% of next year’s crop, it will at least be a start; hopefully these would be your worst sales.
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