The inverse in corn prices from old crop to new crop is starting to disappear. Buyers have been pushing the old-crop bids above the new-crop bids, as they were concerned with a possible shortage of old-crop corn.

The likelihood of an early corn harvest this year has greatly reduced these concerns, as has the realization that old-crop corn inventory will not be depleted. It is doubtful the premium will be totally eliminated until crop size can be better determined.

Economists continue to point out how next year’s soybean stocks in the United Sates will shrink to razor-thin levels. U.S. soybean stocks on March 1 of this year were reported at 1.37 billion bushels.

In March 2013 these economists claim soybean inventory will be half that amount, as the United States is forced to make up for a short crop in South America this year. If correct, soybean values would need to climb considerably to ration inventory.

This need for soybeans has caused the new-crop months to rally in recent weeks in an attempt to sway acres away from corn production. While this has happened in the past, the volume of acres that can be shifted with higher values is minimal.

The highest number was in 1997, when two million corn acres were changed into soybean production. Even if twice this many acres would shift, it would still cause a decline in soybean carryout from this year.

There is a conflict building in the market over the possible release and use of Conservation Reserve Program acres. The USDA and environmental groups would like to keep acres in the program, as 6.5 million of the 30 million are set to exit this coming September. The concern is, these acres are on marginal ground, and the yields on them will not cover potential damage to the environment.

The National Feed and Grain Assoc. is in favor of letting acres exit the program, though, claiming the land will be necessary in satisfying future grain needs.

For corn, this concern over new-crop grain supply may be over-exaggerated. Given current corn use and acreage estimates, a corn yield of just 160 bushels per acre would still allow carryout to double from this year to next.

If corn yield would happen to reach the USDA trend projection of 164 bushels per acre, new-crop carryout would climb to a large 1.6 billion bushels. Obviously, carryout levels this high will make it nearly impossible for corn futures to hold where they currently are.

Trade also continues to try to predict how much new crop corn may be harvested in the old-crop marketing year. Some analysts are predicting as much as 18 percent of the corn crop may be mature and harvested by then.

If the U.S. corn crop reaches 14.4 billion bushels, as some projections are calling for, it will make 2.6 billion bushels of new-crop corn available by the end of August. This will greatly reduce the need to push late-summer corn bids to secure inventory.

Karl Setzer is a Commodity Trading Advisor/Market Analyst at MaxYield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.MaxYieldCooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.