what lies ahead for 2013 corn production.

2013 Corn Outlook:

   Thankfully we are receiving rain, although it has delayed early plantings.  The northern corn belt got snow and soil temperatures are cold, don't expect an early start there.  The southern states  were delayed by spring rain and need to get corn in the ground fast if they want to get it pollinated before summer heat waves arrive.
   Outlooks are still variable on total rainfall expected for the growing year.  Some had said we do not get 2 drought years in a row.  We need to get production back to normal to meet demand and more than one year of a shortage would be a problem.  I saw this chart on the Top Producer magazine.



   It shows that although we haven't got a severe drought two years in a row twice it was only a year in between two severe events.  1934, 1936 and 1954, 1956.  The odds are good that with this spring plantings will have moisture to get things started.  What we need is a whole year of rebuilding rainfall.  Even with that we also need to get corn planted and other conditions to be favorable. 
   USDA reports show expectations of larger acres planted to corn than before, and grain stocks today covering needs.  This has caused a drop in the grain markets.  Chart below.

July 2013 Corn

You can see the large drop in price after the report from $7.30 to $6.30 and the last three days slight recovery as planting is delayed (also wheat conditions are not good ).

Dow Jones Chart. Bellow:

 

 

 

While corn was dropping the Stock Market has had one of it's largest rallies.  I expect that as the year progresses and any adverse weather effects the corn outlook we will get another price increase in the corn futures.  Two things will drive this. 1. weather  and 2. money leaving the stock market and returning to commodities.  Eventually the stock rally will wane and traders will be trying to pick the bottom of the commodity cycle.

   I am holding a little extra corn for feed coverage this year.  Although the grain stocks report shows larger than expected corn storage I am having a very hard time believing it.  Most of the drought hit areas have no on farm grain in storage and Commercial storage at local elevators is at minimal to empty levels.  They have been given no incentive to hold grain as every month the price outlook was lower.  I think the biggest surprise this year will be where is the grain come August.  Inventories out and harvest delayed.

                                                                               Serving Together,  Dean