While the growing season has treated most corn growers well this year leading to a big corn crop, the challenge is now selling all of that grain in addition to what remains in the bins.
Steven Nicholson, a Global Sector Strategist for grains and oilseeds with Rabobank, suggests farmers hoping for a price rally this fall should manage their expectations.
According to Nicholson, “It’s just not good, and this is a supply-side story with where we are today. Farmers are hoping for that fall rally, and I have to say, I don’t think that’ll happen this year. You may see a little bit if the funds come out of their net short position if they want to take some profits. Keep in mind that a rally is going to be well sold, and also keep in mind that a rally is going to be tough because you have so many more stocks on the ground than we’ve had the last three or four years, and so the markets going to go, ‘I don’t need to buy this just because it’s a rally. I’m not worried because there’s plenty of stocks and there’s not a shortage.’ So, I think it’s a much different situation than we’ve had the last several years.”
While this year has played out much differently compared to the last several years, Nicholson says that the outlook does not show any major changes on the horizon.
He adds that weather might be corn growers’ biggest enemy as well as their greatest advocate right now. The return of La Niña will play an even larger role in influencing the markets.
He also expects the Presidential Election to have some impact as well.
While the U.S. is expecting a large corn crop this year, it is not without its own issues.
Low levels of corn stunt disease have been confirmed in Kansas, which joins Oklahoma and Missouri in confirming the disease for the first time. Five Kansas counties have confirmed its presence via lab testing.
Corn stunt disease can cause up to 100% yield loss in infected fields.
