Now that we have had some time to think about Friday's USDA report, mull over the potential numbers and listen to other experts, I feel one is left with a clear impression that “THIS WAS THE MOTHER LOAD FOR THE BULLS!”
For better or worse, we have the potential of heading into an early 1970s type environment. Big price moves, big price ranges and a whole lot of opportunity. All I’ve been hearing since I’ve been involved with the markets is ‘All I want is the chance to have good prices to sell.’ Well, you now have the opportunity, but the issue will be “HOW ARE YOU GOING TO BE ABLE TO TAKE ADVANTAGE OF IT?
REMEMBER OUR MOTTO: LEARN TO UNDERSTAND THE BULL, BUT LOVE THE BEAR! Now is the time to get prepared for exciting pricing opportunities for 2007 and 2008!
I suggest the function of the market is to stimulate supply when demand is high and ration usage when supplies are tight. We now going into a period when the market is going to want to assure more acres are planted.
So the critical question that everybody will be asking now is ‘How high does December corn have to go in regard to November beans to change the planted acreage number from 78 million acres to 80 million acres?’
I suggest many in the trade will believe that Friday’s acreage numbers will grow, but the reality is that many producers have already bought their seed and fertilization programs; changing now is a big pain in the neck! It’s been my experience that producers like to plant corn, but they also don’t like changing their game plan this late in the schedule.
The variable that I believe will really influence how the corn/bean acreage shift will be SPRING WEATHER, specifically the weather in April to early May. For the last few years the “big boys” have started planting the first of April. If the wet weather continues for most of April into early May, it’s going to be difficult to attract more producers to increase corn acres with high cost and potential for yield reduction.
In summary, look to the sky now for the lead to how strong corn prices will get between now and early May.
