Sorting out the September numbers

By Jon Scheve, Superior Feed Ingredients, LLC

The September USDA report showed corn carryout may end up being one of the tightest since 2012. While the yield estimate dropped to trade expectations, the USDA also decreased the harvested acre estimate by another 1 million. This is nearly equivalent to lowering the national yield by another 2 bushels per acre.

While this is good news for producers, and could mean the tightest carryout in a decade, it does not guarantee the market will eventually trade above $8. Higher prices may restrict global demand. With worldwide recession concern, and the U.S. dollar at a 20-year high, corn usage around the world may ration itself at these price levels.

Seasonally, the market usually pulls back as harvest moves north in late September. Therefore, the market may be range bound for the next 4-6 weeks between $6.50 and $7 until more is known about the actual size of this year’s crop.

For soybeans, the USDA decreased the yield estimate below what most in the trade expected. Currently, next year’s carryout estimate looks to be the lowest in 7 years. Like corn though, global bean demand is still uncertain.

In the short-term, the upcoming U.S. harvest should keep pressure on prices through at least mid-October. Long term, the potential size of South America’s next crop will dictate price direction, any weather issue in the southern hemisphere in December or January could mean explosive bean prices. 

The bottom line is, the September USDA report was favorable to producers, but moving forward, demand will be heavily impacting prices. 

Please email 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

Ohio renews commitment to USDA CREP projects

The Ohio Department of Agriculture (ODA) and the Ohio Department of Natural Resources (ODNR) renewed …

Leave a Reply

Your email address will not be published.