Corn Futures Surge Amid U.S. Production Shortfall, Soybean Producers Advised to Advance New-Crop Sales

Corn futures surged to contract and multi-year highs as production prospects for the U.S. crop are well below previously expected, prompting higher volatility and prompting producers to take advantage of higher prices by actively selling their old-crop stocks.

The Pro Farmer Crop Tour pegged national corn crop production at 15.344 billion bushels on an average yield of 173.2 bushels per acre, leading to concerns over demand and causing the futures market to rally. The USDA reported weekly U.S. corn export inspections totaled 1.296 MMT during the week ended Aug. 20, down from expectations.

Cash-only marketers are advised to sell 10% of old-crop stocks and hedgers should cover the remaining half of the $4.80 puts, bringing total sales to 60% forward sold. The next upside price objective for corn bulls is closing December prices above solid chart resistance at $5.50.

Soybean producers, on the other hand, are advised to advance new-crop sales as production prospects look promising despite challenges faced by the corn crop. Cash-only marketers should sell another 20% of new-crop soybeans, bringing total coverage to 75% sold, while hedgers should sell the $11.60 puts covering 40% of production.