Yesterday the USDA announced that it expects American farmers to harvest a record of 13.8 billion bushels of corn for the year. While the number easily surpasses the previous record of 13.1 billion, it falls short of what many analysts and investors were expecting. The contraction in expected crop production led to a rally in corn prices yesterday that is spilling over into this morning. The drop in harvest and rise in price is sure to be painful for the record number of short positions betting against corn prices.
Corn futures for September delivery, the front-month contract, settled up 6.25 cents, or 1.3%, at $4.72 a bushel at the Chicago Board of Trade. December corn futures, the contract most closely aligned with the fall harvest, rose 10.75 cents, or 2.4%, to $4.64 a bushel.Seth Klarman’s 2021 Letter: Baupost’s “Never-Ending” Hunt For Information
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
In the same report the agency cut forecasted production for soybeans, sending prices higher for those future contracts as well. While the harvest will be the third largest in U.S. history, it is about 5% smaller than previously estimated, coming in at 3.225 billion bushels.
CBOT August soybean futures rose 33 cents, or 2.5%, to $13.7375 a bushel, a more than one-week high. Soybean futures have dropped 22% from last September’s record settlement of $17.71 a bushel.
Expectations for wheat production were left unchanged. It is also worth noting that these numbers are estimates and can be revised again between now and the end of the year.