Traders must now turn the page from “old-crop” to “new-crop.” Questions and debates are already arising in regard to 2015 production:
- How many corn acres will US farmers plant in 2015? Most early guesses range from 87 to 90 million acres. The consensus seems to be a number north of 89.0 million will be considered somewhat bearish, while a number sub-88 million might start to be considered somewhat bullish. Obviously the bulls are wanting to see the acreage number slip down to around 87 million acres or lower. On the flip-side the bears are thinking if corn prices can hold at their current levels or perhaps slightly higher, US producer will plant closer to 90 million corn acres.
- What type of yield estimate will the USDA start out using? You have to believe the USDA will start with a yield estimate somewhere between 165.5 and 167.5 bushels per acre. Bulls are hoping somewhere along the line a “weather” story can build that eventually causes the the trade to consider a 10-12 bushel reduction in yield. If this is to happen prices could certainly push north of $5.00 in 2015. The problem is without a bullish weather story, yields around or north of 167 bushels per acre would certainly be hard for the bulls to overcome, hence keeping a lid on most any and all significant rallies.
- What about South American Production? Most sources inside the industry are looking for Brazilian corn production to be down by about 5.0 MMTS, Argentine corn production is estimated to be down some 3.0 to 4.0 MMTs. A lot will obviously depend on the weather moving forward and the planting of second-crop corn in Brazil. Most sources will tell you the second-crop in Brazil needs to be planted by late-February or at the latest the first week in March. Stay tuned…