RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Agricultural

Here’s Why You Should Buy Corn

Posted 08/19/2019 9:28AM CT | Frank J. Cholly

The USDA is wrong! We had a historically late start on planting. We have a historically high number of Prevent Plant acres at 11.2 million! It’s the middle of August and the Weekly Crop Condition update still has corn at just 58% good to excellent rating, but the USDA is STILL projecting corn yields to be 169.5 bushels per acre. Furthermore, the USDA is reporting that 90 million acres of corn was planted somehow this season and that roughly 40 million of those acres were planted after June 1st. Do you think that that is going to give us yields of 169.5 bushels per acre? I don’t think so!

Something is definitely off in all the data that was released in the last Crop Production & USDA Supply/Demand Report on August 12th. My first argument would be that yields have to come down, 169 BPA is just too high with planting delays and current crop condition ratings. I also cannot accept that 11.2 million acres opted for PP Insurance, and yet somehow, we have 90 million acres of corn planted. But this is what the USDA has reported, and traders must trade off that information and there were too many longs in the market. So, we’ve had the big correction down in corn prices. When was the last time that everyone was right on a trade?

In summary, I’d forecast corn yields closer to 160 BPA and corn acreage under 85 million. It will take some time for the USDA to come to this realization…so be patient and as always, manage risk.

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Frank J. Cholly

Senior Market Strategist
Frank brings his clients more than twenty-six years of commodity futures experience. He was a member at the Chicago Board of Trade for 10 years where he filled orders in the grain and financial pits. Frank was also a Lind-Waldock's floor manager for ten years and later joined on as a commodities broker.
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