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Did Rains and Wetter Weather Forecast Kill the 2021 Bull Market for Corn?

By Tyne Morgan

Not even a week after USDA released its June Acreage Report that shocked the market with fewer acres, prices reversed this week. After the July 4th holiday, weather forecasts turned wetter. As a result, corn prices closed limit down on Tuesday.

“I think we had the idea that acres weren’t quite what we thought, they were less than expected, but the change in the weather pattern, and the increase in production estimates, seems to have made up for that based on the price action,” says Brian Splitt of AgMarket.Net. “But we also have a little bit of a macro economic influence. You look at what’s going on globally, we’re seeing expectations that the UK is going to be ending their lockdown. Yet, we have Tokyo announcing that we’re not going to have spectators at the Olympics due to COVID-19. And it does seem to be putting a little bit of a foothold in the macro economic sentiment, putting some negative trade influence with what’s going on in the energies in the equities right now.”

Whether it’s weather, or fears over an uptick in COVID-19 cases across the world, Tommy Grisafi of Advance Trading says the rains helped improve corn crop conditions in some states. Advance Trading and Red River Farm Network teamed up for a “Boots on the Ground” tour of North Dakota this week. Grisafi says after seeing crop conditions first-hand in North Dakota,  while the wheat crop is as bad as advertised, recent rains have helped revive the corn crop in the eastern portion of the state.

“North Dakota’s corn has a pretty good chance here of making a decent crop with a couple more spoon fed rains,” he adds. “Soybeans have a chance, too, but we’re not quite there yet. We need some August weather to have a better idea.”

Grisafi says as the growing season continues, producers who’ve been betting on North Dakota’s corn crop eating into the overall production this year may need to rethink their marketing strategy.

“If you’re watching the show this week, and you’re not selling corn or beans and you live in the “I States,” and you’re growing a big crop, I think you’re making a mistake,” says Grisafi. “If you’re scared to sell, I think you need to protect it. You’ve had three chances of protecting and selling above $6. And maybe you weren’t interested in doing that. But as it rained over the 4th of July is over, and if some timely rains hit in July, we’re seeing selling pressure on these markets.”

Grisafi thinks soybeans still have a story, as crop conditions are struggling with more moisture needed to finish out North Dakota’s corn crop this year, but says corn’s bullish story may be coming to a close.

“Sometimes you. just have to admit that we’ve already seen our summer market and it’s time to move on,” he adds.

So, is the summer weather rally truly over in corn? Splitt says the extra acres planted in the Dakotas is a factor producers need to watch, especially if the region, which has been an area of corn since spring, gets more rains and the possibility of seeing trend line yields becomes a reality.

 

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