Corn, soybean rally in jeopardy?
Corn and soybeans have been rallying while wheat has struggled recently, with prices dropping back below $7 after trading over $1.50 higher than that at one time at the peak of the market. Wheat charts look toppy, with prices quickly retreating and with charts pointing to a quick retreat below $6 if the V top is confirmed.
That leaves corn and soybeans in an uncomfortable position of rallying against a dropping wheat market. Now nearly all prognosticators of grain prices are calling for corn to push to the $4.90 area or higher, with many calling for $5 corn to be achieved in a hurry. But if wheat prices drop below $6, that might be a tall order indeed, as wheat once again would be back into feed rations around the world if corn was $5 and wheat was $6. So the whole idea of corn prices running to $5 or so would have implications far beyond the corn market.
FSU and Russian weather forecasts continue to improve in recent days, with more rain and cooler temps finally forecast in this region that should improve late season crop prospects, and also improve the outlook for winter wheat planting. If enough rain falls, the outlook for 2011 wheat might be greatly improved, and so the markets keep an eye out for the sky and what the outlook is for fall planting.
US crops remain in outstanding shape, with the Pro Ag yield models running to new yearly highs at 165.4 bu/acre corn and 44.14 bu/acre soybeans - both above the newly revised USDA projections. In spite of lots of warnings and cries about problems brewing in different areas of the country (heat in the Delta, flooding in IA and the Midwest) we still have outstanding yield potential in crops across the US. Especially rising significantly was the soybean yield potential, rising nearly 1/3 of a bushel/acre this week in a strong performance for soybeans. It is a fact that soybean yield potential has been expanding rapidly in recent weeks. The Pro Farmer tour seems to be confirming that finding with its pod counts this week, and that seems to be starting to have some negative influence on the soybean market.
Could it be that the sagging wheat market will eventually drag down the corn and soybean markets as well? OR can the rallying corn market drag soybeans and wheat higher despite what appears to be a very good US crop of all 3 major commodities? This seems to be the question of the day, and these questions will be answered by the market over the coming weeks. This week, corn prices have risen so far while soybean prices have floundered, and wheat prices have moved sharply lower.
If Russia catches a major storm and precip amounts this week, perhaps even feedgrains cannot withstand the selling coming out of the wheat pits. It might be look out below for the soybean and corn market, especially if the eastern corn belt and Arkansas can catch a late rain to really help fill out the soybean plants with beans.