Yes, it is April's Fools Day, but this quotation is genuine.Corn 348-4 down 3-0
"Be mentally prepared for talk of $3.00-a-bushel corn or lower, in the absence of crop adversity."
The caution, from Richard Feltes at Chicago broker RJ O'Brien, implies investor talk of corn falling to a price level not seen, bar a couple of brief blips, for a decade, besides being 15-20% below the level that the Chicago futures curve is currently sitting at.
'Real shocker'
The warning came as commentators sifted through the wreckage in the corn market left after the US Department of Agriculture on Thursday, in a much-anticipated report on US farmers' sowings intentions for this year, came up with a corn area number of 93.6m acres - 3.6m acres higher than investors had expected.
As Joe Lardy at CHS Hedging put it, this number was "a real shocker".
The consensus seems to be that this implies an extra 500m-550m bushels of US corn production this year.
And that would be enough to take corn stocks above 2.5bn bushels as of the close of 2016-17 – which would be the largest inventories in nearly 20 years.
"This would be very bearish," said Rabobank, adding that it was considering a downgrade to its corn price forecasts, which currently predict values staying at about $3.70-3.80 a bushel over the next year.
'Number is too high'
It has to be noted that there are plenty of doubts as to whether the 93.6m-acre corn sowings figure will be realised.
"We expect that the USDA corn planting number is too high," said Rabobank, citing the enhanced (relative} appeal of soybeans to growers, given the price ratio of the key new crop November soybean and December corn futures....MORE
Wheat 471-4 down 2-0 after trading as low as 466-2
*USDA Corn Reports: This Ain't Rock and Roll, This Is Genocide
