Yields Expected to Fall as $5 Corn Approaches
Corn futures continuing to rally with the July contract pushing above the psychologically significant $4.50 level for the first time in five years on Friday.
"The market is definitely supported by the surprise USDA report where they cut 3 million acres from planted acres," says Blohm. "Going forward, we're still anticipating further yield drop potentially and we're also anticipating even fewer planted acres."
She says nationally, as of last week, 17% of the corn is still not planted and even in wet years, that's a lot.
"In 1993, Illinois and Indiana were planted this week in history and now they're not at all," says Blohm. "We had 25% of Illinois that had yet to be planted and a third of Indiana that needed to get planted."
Blohm says that lag is likely to have a big drag on yield as 2019 moves toward harvest. USDA's forecast of 166 bushels to the acre amounts to a 6 percent drop from trendline.
"In 1993, total production was actually 16% below expected trendline," says Blohm. "If we have, let's say, even a 10% drop on yield, which takes 17 bushels off and another 2 million acres less of planted area it takes carry out to a billion bushels and even under a little bit."
Blohm says that's a different story for the market all together.
"Watching December corn at $4.50 as resistance, if we can clear that [then] $5 is the next [level] higher," says Blohm.