Corn futures markets have experienced extreme volatility over the past 30 days. July futures have rallied $1.25 off their lows made on May 18th. On Wednesday, June 21st, July closed at $6.71 futures. Old crop basis weakened significantly as producers started moving their crop post-Memorial Day.
New crop corn has seen even larger rallies, from lows around $4.90 to a close today, 6/21/2023, at $6.29. Weather has been the primary driver of markets, and despite very low demand, prices continue to climb higher. See map below detailing recent decline in US corn conditions. Option premiums have more than doubled for some short-term options, making selling call premiums more appealing. At the close on Wednesday, June 21st, a September Short Dated New Crop call would trade for 30c, expiring on August 25th. The seller of these calls today would collect 30 cents and have an HTA contract @ $6.50 CZ23 if the market was above $6.50 on August 25th. New crop marketing has picked up significantly over the past week for obvious reasons.
Bears have taken a beating but still point out the lack of demand and how US corn is well out of the market for exports, while the bull stands strong on the hot and dry forecast. The top-end yield of the 2023 crop seems gone; the record that the USDA projected in March of $181.5 feels easy to dismiss today, but how low can it go? 177? 174? 168? At what point does the supply cover the loss of demand? If anyone knows these answers, please reach out to me. The USDA will announce new numbers on Friday, June 30th, and I expect volatility to continue into month-end. As always, reach out to your local Aurora Cooperative merchandiser for any of your marketing needs.
Old crop soybeans are in execution mode, with very little left on the farm and minimal demand remaining. New crop beans have rallied $2.45 from their lows a month ago, with SX23 currently trading at $13.75. Similar to corn, the marketing of new crop beans has picked up quickly over the last week.
Sam Johnson
Grain Hedge Desk
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