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.

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