PURE GOLD mdash Golden corn kernels pour out of a combine Taken Sept 6 2016 Arkansas U of A System Division of Agriculture photo by Kevin Lawson

PURE GOLD — Golden corn kernels pour out of a combine. Taken Sept. 6, 2016, Arkansas. (U of A System Division of Agriculture photo by Kevin Lawson)

9 factors that favor higher corn prices

The accompanying table shows an interesting change in prices over the last year. As of Oct. 5, corn prices in central Illinois were down 15 percent while soybeans were up 8 percent, wheat down 33 percent and cotton up 15 percent. So fairly significant changes occurred over the last 12 months.

Now that harvest is near complete, marketing the crop is on the forefront for many producers, probably more so than a couple of months ago.

The bearish trends that started in the fall of 2012 have not been the best friend for many producers. But those trends are now history and the markets are making a major shift.

Richard BrockHere is a list of why odds favor higher corn prices over the next few months:

1. The negative fundamental news is well-known. That’s why the market has declined over 50 cents per bushel since last year’s harvest and nearly one dollar per bushel since June’s highs.

2. Price ratios between corn, soybeans and cotton favor increased soybean and cotton acres this coming year and fewer corn acres.

3. Cash needs pinching many farmers’ cash flows, and soybeans requiring less cash per acre to plant will also favor soybeans.

4. An increase in livestock numbers, particularly poultry and pork, will increase domestic feeding demand for corn.

5. Current prices will discourage planted acres from our foreign competitors, and overall world acreage will decline this coming year.

6. The lower acreage from foreign competitors will result in increased exports of corn from the U.S.

7. The long-term cycle lows are due now and the bottoming process has already started.

8. Seasonally, 44 percent of the lows in the cash corn market have occurred in the timeframe from from start of September to the end of October. That has likely happened again.

9. If the lows come early in the marketing year, the highs normally come later. The earliest one should expect a high for this coming year in corn prices will be March.

Putting It All Together

Since the fall of 2012, it has paid to be an aggressive marketer. That will not likely work this coming year. Until Jan. 1 rolls around, it is a time to take a breather for sellers of corn. Buyers, however, should be aggressive.

Richard Brock is the founder and president of Brock Associates. Email him at [email protected].

TAGS: Outlook
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.