The numbers from the August USDA Crop Production report have farmers reeling. They did not expect them to show bigger number for corn or soybeans and neither did University of Illinois Agricultural Economist Darrel Good.
Quote Summary - My reaction is much like the market. USDA projected larger corn and soybean crops in its August Crop Production report than what we were looking for. That came from higher than expected yields for both corn and soybeans and probably from higher than expected harvested acres for soybeans. So, the net affect is that the balance sheet for the upcoming marketing year now looks plentiful. There doesn’t appear to be prospects for a shortage of either corn or soybeans and it will be difficult for prices to rebound from the low levels coming into the fall of 2015.
USDA’s figures show a corn crop two bushels to the acre better than expected last month and 156 million bushels bigger. The soybean number was up nearly a bushel to the acre and is now projected to be a little less than four billion bushels in size. Darrel Good is not so sure the soybean crop will stay so big and urges patients as it relates to making flat price bean sales. Corn is a different animal.
Quote Summary - In terms of flat price prospects, there is probably not much room for movement in terms of corn prices until we get into the spring of next year and then we start the weather game all over again. So, if we are thinking of storing corn unpriced, it must be a longterm decision. If there is sufficient carry in the market to cover storage cost, then storing and forward pricing is still and opportunity on corn.
The carry in soybeans - that’s the premium paid to a farmer to store a crop for delivery at a later date - is rarely sufficient to cover storage cost says Darrel Good. But he adds there may be a little more room for the price of soybeans to rally in the near term.
Quote Summary - If we do loose a few of those expected harvest acres and if the yield is not quite as high as currently forecast, then we could see a near term bounce in soybean prices.
This bounce could occur just before or just after harvest dependent upon future USDA production reports.