The following is portion of an article from AgWeb.com:
by Boyce Thompson, AgWeb.com Editorial Director
Thanks to public hysteria over drought conditions coupled with massive uncertainty over harvest yields, the final leg of the current corn futures run-up could be “explosive,” Farm Journal Economist Bob Utterback told an audience at this week’s Corn College in Coldwater, Mich.
Utterback, who advises farmers on future trades and trades himself, forecasts a short-term “correction” in corn futures followed by a spike. A sharp rise in prices is just about the last thing farmers want to happen, he said, because it can destroy confidence among grain end-users and change business behavior.
“Drought is now the No. 1 issue on major news networks,” Utterback said. “The psychology of the market, which is sometimes as important as reality, is getting very bullish. This is frightening stuff.”
The current bull market is being fueled by uncertainty over the drought’s toll on yields. Utterback believes that the USDA’s current corn yield estimate, 146 bu. per acre, is too high. His forecast is 134, though some analysts believe the yield may be closer to 118.
“This why we’re getting 60 to 80 point swings in the market,” he said. “The market is very, very uncomfortable with its ability to forecast yield right now.”
CLICK HERE to read the remainder of this article.
Source: AgWeb.com
Posted by Haylie Shipp
