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Why I believe "Demand" will remain a driving force for corn prices

Kevin Van Trump believes the U.S. demand for corn is going to surprise on the upside.

Corn prices have moved very little the past several sessions. The trade is gearing up for a couple of heavily anticipated reports scheduled for release at the end of the week.

Not only will the trade be digesting Quarterly Stocks, but also the 2018 Prospective Plantings Report. I keep hearing U.S. planted corn acres will probably end up between 88.5 and 89.5 million, slightly lower than the USDA's early guess. Cooler soil temps and heavy moisture in some areas to the South and East might eventually start adding to concerns about total planted acres.

Remember, for several of these areas, a corn crop planted too late creates major concerns about pollination and lack of moisture available during the later stages of the growing cycle.

As for U.S. demand, I continue to believe it's going to surprise to the upside. Exports and ethanol demand will remain strong. At the same time, I'm thinking demand from the livestock industry is going to gain more momentum. In other words, I believe "demand" is going to remain a driving force along with possible weather headlines and a more active macro commodity bull.

As for South America, it feels like the Argentine crop continues to get smaller, while the Brazilian second-crop corn has enjoyed more cooperative weather, appearing to slightly improve. Staying patient as some of the bearish headwinds blow over... I still believe the crop in Argentina is getting smaller, while demand here in the U.S., China and other parts of the world is increasing.

As both a producer and a spec, I'm sticking with a longer-term bullish tilt.

 

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