Will corn drop below $7 or exceed $8?

By Jon Scheve, Superior Feed Ingredients, LLC

Last week:

  • July corn finished 7 cents higher than the previous week 
  • December corn finished the week 26 cents higher 
  • November beans finished 41 cents higher than the previous week
  • Wheat was down $ from its close the previous Friday.

Fear drove the wheat market to a record high of $13.63 on Tuesday before it dropped over $2.50 per bushel the next few days. July wheat now seems to be trading a wide range between $10 and $11.

Beans continue to see estimates of a smaller South American crop being harvest which keeps bean values supported for new crop moving forward. 

July corn looks to continue trading between $7 and $7.50 while new crop December futures should be in a range of $6.25 to $6.75 until the market becomes more confident of world supply and demand potential. The major concerns for the corn market are if Ukrainian farmers will get a corn crop planted in the next couple of months and if the old crop still sitting in the bins is exported this summer. The Ukrainian government stressed how important it will be to get the new crop planted this year, but the logistics of planting a crop while fighting a war would seem to be extremely difficult. 

The USDA report showed corn export and ethanol demand increases and many in the trade expect those estimates to continue increasing in future reports. Add to that the increased risk of La Niña conditions lasting into the summer months, which increases the chance of dryer conditions in the western Corn Belt, and we come away with some very bullish scenarios for this market down the road. 

However, it’s important to consider that there is feed demand destruction happening both here and around the world at these high prices. Additionally, we saw the spread of bird flu in the U.S. the past couple of weeks which has been largely dismissed by the market so far. There have been rumblings in the fuel verses food debate lately and if any changes to the current mandates were to occur it could significantly alter the demand picture.

A bumpy ride likely continues for these markets.

Please email jon@superiorfeed.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.

Trading of futures, options, swaps and other derivatives is risky and is not suitable for all persons. All of these investment products are leveraged, and you can lose more than your initial deposit. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful, and in accordance with applicable laws and regulations in such jurisdiction. The information provided here should not be relied upon as a substitute for independent research before making your investment decisions. Superior Feed Ingredients, LLC is merely providing this information for your general information and the information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision. The contents of this communication and any attachments are for informational purposes only and under no circumstances should they be construed as an offer to buy or sell, or a solicitation to buy or sell any future, option, swap or other derivative. The sources for the information and any opinions in this communication are believed to be reliable, but Superior Feed Ingredients, LLC does not warrant or guarantee the accuracy of such information or opinions. Superior Feed Ingredients, LLC and its principals and employees may take positions different from any positions described in this communication. Past results are not necessarily indicative of future results.

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