All eyes are on USDA tomorrow and while many farmers are focused on yield estimates, Chip Nellinger of Blue Reef Agri-Marketing says the world ending stocks are where corn’s rally potential really lies.
“Obviously, the crop size matters,” he told U.S. Farm Report host Tyne Morgan. “I think that we already traded a fairly large crop, maybe in the 177 to 178 range. But, the bottom line may be shocking to some people, because even if it is that big, and I'm not convinced it is yet, a 178 crop comes down to the world numbers.”
According to Nellinger, if the world continues to shrink, the size of the U.S. crop won’t matter as much.
“The crop could still be record and we could rally,” he explained, “it could be a little bit of a shocking reaction.”
A Bullish Long-Term Outlook
There’s a lot of old crop corn left in the bin, according to Nellinger. That said, he isn’t sure we’ve reached a rally high just yet.
“It depends on your timeframe,” he says. “If it's between now and harvest, maybe $4 December corn. If you're talking post-harvest, and the next spring and summer, I’m not 100% confident that we've seen the highs yet. You could make a case for a long-grinding, demand bull market that takes us up to $4.40 range by next July.”