If producers are looking to sell some old-crop corn, this might be a good time to get it moving.
Global Commodity Analytics market analyst Mike Zuzolo said some of the basis levels across the country, especially at some ethanol plants, are running high and may offer a good opportunity to make some profit.
“You’ve got basis levels at ethanol plants in Indiana running 35 cents to 60 cents over right now, and that’s back over $5 per bushel in cash,” Zuzolo said. “I think this is a good place in those areas to let the market be rewarded for that sale.”
However, for those looking to forward-contract their corn, he preached a bit of patience.
Zuzolo said the market is having difficulty assessing the 2019 crop size ahead of the July 11 Supply and Demand numbers. He recently went on a crop tour through parts of Michigan, Ohio, Indiana, Illinois and Missouri, and he said crops were uneven.
“Hot, dry weather and cool, wet weather will be bad for production potential. I think the bean crop is completely wide open at this point, as far as yield potential, and time is running against us because of the lateness of the crop,” Zuzolo said.
“For corn, I was a little more firm in my assessment that it’s going to be tough to get above a 13 billion bushel crop production.”
He said a 166 bushel per acre estimate for corn from the USDA is among the high end of estimates, and he would expect around 163 bushels per acre if the weather is normal.
“If there is 13 billion bushel production or less, it will keep us below a 1.5 billion bushel carryover,” he said. He said holding those carryover numbers would help the market test the $4.73 mark in corn contracts.
“For new-crop corn, I’m patient until I see the July crop report and until I see July weather unfold,” Zuzolo said.
“The path of least resistance in corn, thanks to the wheat market giving support, is to recheck those old highs.”