As for new-crop corn I am actually starting to become a little more bullish. Certainly not yet to the point ofirrationalexuberance, but yes I am thinking aboutsharpeningmy bull horns. I know a move more toward the bullish side of the fence may sound strange, especially considering all of the bearish rhetoric, but as I talk to more producers, I become more concerned about overall yield potential.
Yes, I know its early, and that USDA generally doesn't give much credence or yield reduction to a late-planted crop, but from where I sit today a sub-150-bu. type yield is certainly not out of thequestion. Especially if you buy into the belief or fact that thecorn plant oftenestablishesits pace, or potential, somewhere between emergence and"V5 stage.
Keep in mind, for many of the big producing regions, not much nitrogen is on the fields, the corn is yelling "feed me" and there is now some serious weed competition. Also keep in mind most guys are scared to put down atrazine simply because they can't follow it up with soybeans. I could go on and on, but the point is, overall yieldpotential might be much moreadverselyeffected than many in the trade are estimating.
I am not saying yields are determined at this stage of the game, but I am saying our yield potential could certainly be injeopardy. That is why I recommend that producers stay somewhere between 40% and 60% priced or hedged in new crop. I know there is a lot of bearish rhetoric blowing in the wind right now, but I think our best move is to just hunker down and see how this plays out.
Remember that we still have some very big bullish wild cards in the deck in the form ofJune moisture, July heat, U.S. harvestconditionsand Chinese production (Bloomberg reporting this morning that corn output in China may drop as wet,cold weather in their northeast regions delay planting).No need to get overaggressive on thedown stroke!