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| Currently the USDA projects a 183 yield, +6 bpa above our current record of 177 last year.
We are going to have an amazing crop, no doubt. I’d be really surprised if it wasn’t a record.
But what if the crop is still a record, yet closer to 180 rather than 183?
With the current demand estimates, a 180 crop would give us a sub 2 billion bushel carryout.
Now that’s by no means “bull market” numbers. But not too long ago the talk was about a possible 2.5 billion carryout.
The market does not have 177-180 yield priced in. If indeed we are closer to last year or 180 due to all the problems some areas saw with wet planting etc. it would catch the market off guard later.
Along with that, these lower prices are creating that much more demand.
High prices cured high prices. Low prices will eventually cure low prices.
But of course, if this crop is closer to +185 there is still a lot of downside risk. But I’m leaning towards sub 183 simply given all the spots that suffered from wet planting & excessive moisture. Despite some areas such as Illinois who are going to have monster crops.
The point is.. even if yield is a record but not a record by this massive amount. Then our balance sheet doesn’t look all that awful.
Long term optimistic demand will lead us higher. Short term very cautious.
We go over more of this in our audio update today for those interested. We also went over how to capture the carry in bear markets like this one. Can listen here: https://txt.so/kzaU4S
(S&D Sheet Below)
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What if we have a record corn crop, but not by a massive amount?
