Higher Corn Futures May Present Marketing Opportunity

The price of corn in Chicago is up about 75 cents since the end of March and this may represent a good new crop corn marketing opportunity. The price strength comes from dry weather conditions in South America and the associated strength in export demand for U.S. corn, according to University of Illinois Agricultural Economist Darrel Good.
Good says that without substantial surprises in the upcoming USDA reports at the end of the month, corn prices will be mostly influenced by weather and yield expectations, which is usually the case this time of year. He says the market has already begun to price in the risk of a 2016 average yield below trend. Good says
Good: “Producers have waited for and now welcome the higher corn prices. The higher prices coupled with the uncertainty about summer weather however means that producers now have more risk. December future prices are now 60 cents above the Crop Revenue Insurance established in February so there is revenue risk for unpriced new crop corn. Still prices would continue to increase with unfavorable summer weather conditions. What to do? Managing the current new crop price risk can be accomplished with a combination of the timing of incremental sales and the use of options or option-based cash contracts.”
He adds that your marketing strategy will also be influenced by your local crop conditions and production expectations.