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By Jon Scheve, Superior Feed Ingredients, LLC
This is the million-dollar question everyone wants to know. Unfortunately, no one knows the answer because the biggest driver of corn prices will be July weather and rainfall. Since no one can predict the weather accurately beyond two weeks, it is impossible to predict future prices for this fall.
For example, the following chart compares the current December corn market with the December contracts from 2012 and 2013. So far through April, prices have been pretty comparable for all three years.
For 2012 and 2013 this price consistency continued through mid-June. However, in late June there are dramatic differences. In 2012, dry weather forecasts started and continued into July throughout most of the growing areas. Conversely, in 2013 timely rainfalls in July led to mostly trendline yields throughout the Corn Belt.
Moving forward prices for 2023 could follow either 2012 or 2013 depending on several unknown factors:
For a repeat of 2013:
• The majority of crops need to be planted on time.
• Total planted acres need to be near the March USDA predictions.
• Timely July rains will be needed to produce near trendline yields.
For a repeat of 2012:
• There must be a major planting delay or reduced total planted acres.
• Crops face widespread dry weather in July.
But, with the unknowable global factors like the Ukraine war or political issues around the world it is impossible to predict with certainty price direction 6 to 12 months from now.
Bottom line
If someone could predict the weather, they could better predict prices. Since that is unlikely to happen any time soon, there will continue to be uncertainty and price volatility in the market.
Please email jon@superiorfeed.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, Neb. 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.
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