Corn yields in the Mississippi Delta remain very strong, coming in approximately 10-20 bushels more than expected and well above last year. Rumors continue to fly on disease problems, particularly in Iowa and southern Minnesota. No doubt the rumors are partially true. Hitting USDA’s yield projection of 188.8 bushels per acre will be difficult. But this is still going to be a very large crop.
Demand remains strong at current low price levels. Exports have been extremely strong and ethanol production steady. Commercial buyers are taking advantage of the expected large crop that is on the way and have been lowering basis bids. Storage will pay this year.
Technically, this market has a bottom. Thursday was a very impressive day as corn futures finished with an outside day up. That puts the major support in March corn just above $4.20. Last week we discussed the first objective in March futures is at $4.40. That still is the case. $4.50 was the major support area from April to June; that also could be a reasonable objective.
Cash-only marketers’ strategy: Continue to sit tight. New-crop sales have been at 35% for a long time and we would not recommend catch-up sales at this point.
Hedgers’ strategy: Thirty percent was forward cash contracted long ago. We continue to maintain the option strategy on 20%. Ten percent is covered with long December $4.70 puts/short (2) December $5.40 calls establishing a floor of approximately $4.70. The July option strategy is long $4.70 puts/short (2) July 2026 $5.40 calls, also establishing a floor of approximately $4.70. We have thought about taking these positions off and putting the money in the bank. However, these are very good prices that are locked in and harvest pressure could send the market back lower. We don’t believe that is a relatively high odd position but, for right now, sitting with a floor of $4.70 is logical.
