This month, corn has been one of the best-performing assets. It has gained by more than 14% and outperformed the overall market, which has fallen due to the increasing trade tensions. Corn, which is planted mostly in the United States has been boosted by the current inclement weather. As the flooding continued, farmers delayed planting and raised worries that large pieces of land won’t be cultivated.
In addition, some of the corn in storage has gone bad because of the flooding. In fact, according to the Department of Agriculture, farmers had planted a small fraction of what they have typically planted in this period of the year. In the past five years, farmers have planted 90% of their corn crop at this period. Today, this has dropped to 58%. This is the worst delay on record. As a result, the market is worried because of both the quantity and quality of the corn that might be harvested.
Farmers have two options for now. First, they can plant soybeans instead of corn. This is because in some states, the soy planting season runs up to July. Alternatively, they can decide to file for insurance payouts, which may lead to more scarcity of corn. According to meteorologists, the situation is improving in some parts of the country. However, other areas will continue to see heavy showers and thunderstorms.
As shown on the chart below, the price of corn has continued to rise, reaching a high of $4.38 per bushel. This is the highest level since July last year. On the yearly chart, this price is above all the moving averages. The RSI has moved way above the overbought level of 70 while the momentum indicator has continued to rise. While the price could continue to rise, traders should be aware of a sell-off that could happen as large investors start to take gains.