Corn and soybeans continue to sell off as we approach first notice day. Farmers will be selling corn as they deal the end of basis contracts and storage periods. We see corn being pressured lower into the end of the week. We see corn prices stabilizing starting in September. Low prices are expected to attract demand and once the large crop is priced in and farmers liquidate old crop we should see better days ahead for corn next month.
US corn is the cheapest feed grain on the global export markets. A deal between the US and Mexico that will replace NAFTA has been agreed upon and that will support corn as well. Farmers are unlikely to make additional cash sales once August 31st passes.
Soybeans are a different story. The large crop could see soybean ending stocks reach 800mm bushels. Without a deal with China for exports we could see soybeans trade sub $8.00. Cash will be sub $7.00. The soybean market could have some real issues without Chinese demand. Even if the US went from 90mm to 85mm acres next year that only puts ending stocks at 500-600mm in 2019. If you have only 85mm acres next year AND China comes back to our export market, only then are ending stocks closer to the 300-400mm range.
Wheat is stabilizing in Europe and we are seeing cash sales come back to the global market. Egypt is buying Black Sea wheat and that has stopped the selling for the most part. We expect US wheat to see more export interest as we head into the fourth quarter of 2018.
While the podcast does not have specific actionable trading recommendations, we do publish them in Turner’s Take Market Alert for spec traders and Turner’s Take Ag Marketing for hedgers. Want to know what to look for in the commodity futures markets? Take a listen to Turner’s Take podcast!
Craig Turner – Commodity Futures Broker
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