The USDA made small changes to the corn and soybeans supply and demand tables. Corn yields came down to 167.0 from 168.4. Bulls were hoping form more than a 1.4 bpa decrease. The NASS did not lower harvested acres after the MN and ND resurvey. They addressed this in their special note in the report.
If the USDA lowers yields again we think it will not be until the January report. Between now and then there is not much bullish news for corn unless South America has serious weather issues. We see Dec Corn in a range between $3.65 and $3.95, which the lower end more likely between now and First Notice Day. Traders who want to own corn may want to wait until after FND and get long in early December.
As for soybeans, the only thing the USDA changed was the Crush by 15 million bushels. Soybeans will most likely be range bound between $9.10 and $9.50. Potential bullish catalysts are the US/China trade deal and South American weather. I like buying soybeans on the breaks. We think yield will come down 1 bushel in the Jan report and Phase One of the US-China trade deal gets done at some point.
Below are my Supply and Demand tables for corn and soybeans. The left column is for old crop, the middle is new crop, and the right column is next year’s crop. Soybeans should be supported at $9.00 if new crop carryout is in the high 400s and next year is projected to be in the low 500s. Over the next six to eight months soybeans has the potential to trade $9.50 to $10 IF there are S American weather issues, US weather issues this spring/summer, or a US-China trade deal that involves soybeans. It doesn’t take a whole lot to lose 100 to 200mm bushels of soybeans when you have two growing seasons (S.Am and the US) ahead of us.
As for corn, we like selling rallies. The 2020-21 balance sheet for corn looks very bearish. If our projects are correct corn a year from now could be $3.20 or $3.30. Dec 2020 is $4.01. March 2021 is $4.11. If you plan on planting corn next season I would look to sell some futures or buy puts and put spreads for hedges. We likes selling Dec 2020 at $4.05 and March 2021 at $4.15. We like the Dec 20 vs Dec 21 bear spread at a 10 cent carry or better.
Corn Supply & Demand Scenarios
Soybean Supply & Demand Scenarios
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