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In this podcast we go over why corn and soybean yields are coming down and what that means for prices. First we look at new crop corn and the range we expect Dec 2020 corn to trade between now and Thanksgiving. Then we go into our reasons why farmers should start pricing/hedging the Dec 2021 corn contract. Soybeans have the potential to rally another 30 cents IF the weather stays hot and dry. Make sure you take a listen to this week’s Turner’s Take.
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Corn Supply & Demand
Corn has rallied over 30 cents since the last WASDE report. The derecho wind damage in IA started the rally and now crop conditions are coming down due to widespread heat and dryness throughout the Midwest. A month ago we thought there would be a record crop. Now we are talking about how low yields will drop off in the coming weeks. I have seen ranges of 175 to 179 lately. Carryout numbers range between 2.2 and 2.5 billion. That implies corn trades in a range of $3.30 to $3.65 if conditions can stabilize. There is rain in the forecast later this week and next week. Temperatures will cool down in September. The US will still have a big crop but not record large.
Corn has major resistance around $3.65. A close above that level could lead to prices trading another leg higher. For that to happen the trade needs to think yields are sub 174 and carryout is heading below 2.0 billion bushels.
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Soybean Supply & Demand
Soybean crop ratings came down 3% to 69% GD/EX and traders think they will come down again next week. Soybeans need rain in August and much of the Midwest has received little to no rain in the past two to three weeks. Yields are coming down in the Sept WASDE. If yield is 51.5 then ending stocks are in the mid 400s. If yield comes back to trendline (50 bpa) then ending stocks will be projected just above 300mm bushels. In that scenario Nov Soybeans could rally to $9.50. A 300mm carryout also sets us Nov 2021 for runs at $10s during the a South American soybean weather market.
Nov Soybeans has major resistance around $9.25. A close above that level could lead to prices rallying another leg higher. For soybeans to rally above $9.50 the market needs to believe yields could be sub trend (below 50 bpa).
If you are interested in working with Craig Turner for hedging and marketing, then click here to open an account. If you are a speculative or online trader then please click here.
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Craig Turner – Commodity Futures Broker
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Turner’s Take Newsletter & Podcast - Turner’s Take is a complimentary weekly market commentary newsletter that covers the Grain, Livestock and Energy futures spread markets using fundamental, technical and seasonal analysis.
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