Corn prices move lower in July due to good weather

(Farm and Ranch Guide) – A large 2014 corn crop estimate is expected to get larger with USDA’s Aug. 12 Crop Production report.

This report uses survey information from late July and early August to update acreage, area harvested and potential yield.

U.S. corn for grain production in 2013 was 13.925 billion bushels, and 2014 production was estimated at 13.86 billion bushels in the July World Agricultural Supply and Demand Estimates report.

The report estimated 2014 average yield at 165.3 bushels per acre, compared with 158.8 bushels per acre in 2013.

“Odds are we will see an uptick in projected yields in the Aug. 12 report,” said Al Kluis, president of Kluis Commodities. “It looks like the big crops continue to get bigger in most areas.”

On July 18, CME Group traded corn futures with September at $3.77, December at $3.84, March at $3.96, May at $4.05 and July 2015 at $4.125 per bushel.

Compared with prices on July 3, September was 35 cents lower, December was 33.5 cents lower, March was 33 cents lower, May was 31.5 cents lower and July 2015 was 31 cents lower.

The futures market was offering a 21-cent per bushel carry to store corn from December to May.

On a cash basis, corn was $3.18 per bushel with a basis of 60 cents under on July 18 at one western Minnesota elevator followed in this column.

Compared with a price of $3.47 in early July, the bid was 29 cents lower, and the basis had narrowed by 4 cents.

One year ago, corn at this elevator was $6.63 per bushel with a basis of $1.20 over.

Corn at this elevator was last $3.18 per bushel in May 2010.

“A lot of people have cash hopefully sold, and they have a good portion covered with hedges and puts,” he said. “Really if you haven’t sold so far, I don’t think there’s a lot to do here, except to see where it bottoms out.

“You’re at a level now that – it’s my understanding – with the new farm program you really don’t have much risk.”

As of July 14, the U.S. corn crop was rated 76 percent good to excellent, 19 percent fair, and just 5 percent poor to very poor. Iowa’s corn crop was rated 75 percent good to excellent.

The U.S. weekly corn export sales report on July 17 was stronger than anticipated at 1.068 million metric tons – or about 42 million bushels. Corn sales over 40 million bushels are considered excellent.

Some corn bids were below $3 per bushel in areas with very wide basis levels. Kluis had also talked to customers in South America that were facing a cash price of $2.05 in Mato Grosso because of a wide basis.

“It’s not pleasant to watch the markets grind lower week after week, but at least I don’t see a lot more financial risk,” Kluis said. “There’s going to come a time in August or September when livestock feeders and ethanol plants will want to lock in some of these real cheap prices.

“Good weather has people projecting record yields and record supplies, but it’s just a matter of what price level do you stimulate enough demand to say that prices are cheap enough.”