Corn producers in many areas are still talking about how "dry conditions" and "extreme heat" is tapering back yields, but I continue to hear from NEW guys each day who are in the fields looking at possible "record crops." In my opinion, this has the trade convinced that U.S. corn production is going to be more than ample in its efforts to support demand. Darrel Good, agricultural economist at the University of Illinois, made good point the other day:
"Assuming the size of U.S. corn demand is near the USDA's current projection of 12.675 billion bushels and that year-ending stocks can be reduced to about 6 percent of consumption, the current corn crop would have to be less than 12.7 billion bushels to require rationing. If harvested area is near the forecast of 89.1 million acres, the U.S. average yield would need to be less than 142.5 bushels to produce a crop less than 12.7 billion bushels. Some believe that the Farm Service Agency estimate of prevented planted acres points to less harvested area. If harvested area is only 88 million acres, for example, the yield would need to be less than 144.3 bushels to require rationing."
Moral of the story: With most ALL industry analysts still projecting a national yield at or near the 150 level or higher, its hard to get overly excited about the prospect of a tight "Supply & Demand" scenario in corn. Until there is more heavy talk of yields potentially falling below 145 bushels per acre, I just don't see us mounting any type of sustained rally.Certainlythere are someunknownsin China, but how much of your estimated production are you willing to wager on that "wild-card" hitting the table anytime soon? Other than that I just don't see a ton of bets on the board for the bulls to make. Trust me when I tell you, if there is not a variety of viable bullish bets it becomes tougher and tougher to attract new participants or in this case NEW money-flow.