Corn prices are best currently summed up this way: “I don’t look at the board. I don’t want to be depressed.”
These anchors are pulling down the market:
- good weather
- projecting of large U.S. planted acreage
- a Brazil crop that’s getting larger
- a significant managed money short (just over 169,000 contracts)
As time moves closer to the June 30 Grain Stocks and Acreage report, a three-day July 4 weekend, and the July 11 Crop Production and WASDE reports, I looked at the occurrences of the late-season rallies. Weather is out of my wheelhouse, so this article will look at two other factors over the past 10 years: managed money shorts and the June planted acreage.
The chart below shows the change in corn acreage from the March Prospective Plantings report to the June Planted Acreage report. It also shows the change in managed money positions from the third week in June to the third week in July.
Highlighted are the three years where managed money had large short positions, like 2025, moving into the June Acreage report.
The result of these three years?
- In 2015 and 2020 reports, June acres were revised downward and managed money decreased their short position.
- In 2024, more acres were added and managed money shorts increased.
Price behaved as you would expect.
- In 2015 and 2020, prices increased on the decreased acres and managed money short covering. Note how short these rallies were leading up to harvest (chart below).
- In 2024, prices continued their downward slide through the summer.
Less acres causing managed money short covering is not a revelation. The main takeaway here is that things could get worse (2024) but that isn’t always the case (2015 and 2020). Two of the last three times that the market was in a similar position, corn saw short relief rallies. The short span of these rallies is something to note.
The factor not discussed was weather – the biggest part in the story (and a factor everyone will be watching).
Questions? Give me a call directly at 701-401-9600 or any hedging strategist on the AgMarket.Net team at 844-4AG-MRKT.
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