Overnight, December Corn was down 3 ¼ cents at $3.43 ¼. Yesterday, corn began the day a few cents higher, then around mid morning, some weather forecasters put out advisories suggesting that much colder temperatures and frost were due to hit the Midwest between September 24th and the end of the month causing corn to rally almost to its 30 cent limit on the day. Given that very little corn has completely matured and the denting process is way behind schedule, any few hours of below freezing temperatures could do a lot of damage to the corn crop, especially in the northern most states where the best chance of frost may occur. Keep in mind that states like North Dakota, South Dakota, Minnesota and Illinois are some of the large producing states of corn. So with that action yesterday, I put out a special report suggesting that producers should unwind 10 to 15% of their short hedges.

Now, looking at Accuweather today, I looked at the temperature forecasts over the next 15 days in several northern Midwestern cities and here are the lowest temperatures forecasted over this time period.

Chicago, Il—41

Minneapolis, MN.—39

Bismarck, ND.—34

Madison, WI.—35

International Falls, MN.—27

Except on the northern most part of Minnesota, Accuweather isn’t looking for freezing temperatures in almost all of the Midwest. They seem to be predicting that the bulk of the cold will hit the northeastern states where a lot less corn is grown. On the other hand, with much colder weather setting in, forecasts for higher corn yields will stabilize and begin to drop and the quality of some of those northern crops may decline as well. This means to me, that the bottom of corn prices is probably in for this season.

The directional movement indicators have crossed to the bull side as well. For all the above reasons, I recommend that producers unwind at least 50% of their short hedge positions now and on any price dips from here.

For speculators, I may put out a buy recommendation today if prices pull back about 10 cents or so. Stay tuned.

Sep. 16, 2009
David Hall