Will corn pull back to $5? Are beans finished going down?

By Jon Scheve, Superior Feed Ingredients, LLC

The pull back in prices last week is partly due to concern with the damage Gulf export facilities have suffered in the New Orleans area. One elevator will likely be down for 6 months, but the remaining 7 or 8 facilities will hopefully be operational as soon as power is restored, and minor damage is repaired. While there may be some missed export opportunities in the short-term, it is still early in the exporting season. If most of the facilities are up and running by middle or late September, there should be minimal impact.

Some market participants believe that planted corn acres for the 2021 crop will be increased in the September report. Others believe the national yield average will improve at least one bushel per acre from the August report. If both turn out to be true, it could mean 250 million more bushels of carryout for the 2021 crop which would be bearish prices from these levels.

While there has been a lot of bearish news this week, it is important to remember that it is common for markets to pull back in September as harvest approaches. Based on historical trends of the last 15 years a 50-cent pullback in prices to levels just under $5, would not be out of the question considering the time of year we are in.

It finally started to rain over the last 2 weeks in the northern Corn Belt, but it might be too late to provide any real benefit to the fall crops there. With daylight shrinking, beans are nearing their end-of-life cycle and corn was already in the final stages.

In 4 of the last 6 years, bean futures values at the end of September were similar to levels at the beginning of September. In the other 2 years, the market finished higher by the end of the month. While there’s no guarantee that beans won’t pull back over the next few weeks, it’s possible bean prices are near a seasonal low. Ultimately, with 60% of the world’s beans produced in the southern hemisphere, South American weather during their upcoming growing season should be the biggest driver of bean prices later this year.

Please email jon@superiorfeed.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.

Trading of futures, options, swaps and other derivatives is risky and is not suitable for all persons. All of these investment products are leveraged, and you can lose more than your initial deposit. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful, and in accordance with applicable laws and regulations in such jurisdiction. The information provided here should not be relied upon as a substitute for independent research before making your investment decisions. Superior Feed Ingredients, LLC is merely providing this information for your general information and the information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision. The contents of this communication and any attachments are for informational purposes only and under no circumstances should they be construed as an offer to buy or sell, or a solicitation to buy or sell any future, option, swap or other derivative. The sources for the information and any opinions in this communication are believed to be reliable, but Superior Feed Ingredients, LLC does not warrant or guarantee the accuracy of such information or opinions. Superior Feed Ingredients, LLC and its principals and employees may take positions different from any positions described in this communication. Past results are not necessarily indicative of future results.

Check Also

Why inverse markets mean farmers should sell their grain now and not later

By Jon Scheve, Superior Feed Ingredients, LLC The USDA had no surprises for corn and …

Leave a Reply

Your email address will not be published. Required fields are marked *