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Crop weather problems could keep corn, soybean prices higher longer

The soybean market has time to build in weather premium.

The November soybean futures contract closed at its highest level since March 11 on Tuesday, and it could be building in some weather premium.

The June 30 Acreage report put U.S. soybean planted area for 2020/21 at 83.825 million acres, below the average trade estimate of 84.8 million and down from the March 31 estimate at 83.5 million.

In a special note from the USDA, as of June 1 there were still 12.1 million acres left to be planted. If we plug the new planted acreage number into the supply/demand table from June and use the current USDA yield estimate, ending stocks would come in at 411 million bushels, down from 585 million in 2019/20 and 909 million in 2018/19.

If yield comes in 3% lower than the current USDA estimate, ending stocks would drop to 287 million bushels. This seems to be enough of a reason for new-crop soybeans to build a weather premium.

The Quarterly Grain Stocks report showed June 1 soybean stocks at 1.386 billion bushels, which was slightly below the average trade estimate of 1.391 billion and within the range of estimates from 1.275 to 1.490 billion. Last year’s June 1 stocks total (and the current record) was 1.783 billion bushels.

The USDA report news was bullish enough to spark significant buying for the soy complex. The meal market also received overflow support from the much-smaller-than-expected corn planted acres. 

Market Ideas 

The weather forecast is still somewhat threatening with hotter and drier weather for much of the next two weeks for some parts of the Midwest. November soybean support is now at 877, with 889 and 895 as next resistance.

Keep 906¾ as an upside target. December meal has already seen an impressive recovery rally. Close in support is now at 296.40, with 301.90 and 306.40 as next resistance. December oil support is at 28.62 and 28.41, with 30.17 as next target. 


For daily updates on cattle, hogs, corn, wheat, and the soy complex, visit hightowerreport.com.

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*** This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. Any information or recommendation contained herein: (i) is not based on, or tailored to, the commodity interest or cash market positions or other circumstances or characterizations of particular investors or traders; (ii) is not customized or personalized for any such investor or trader; and (iii) does not take into consideration, among other things, risk tolerance, net worth, or available risk capital. Any use or reliance upon the information or recommendations is at the sole discretion and election of the subscriber. The risk of loss in trading futures contracts or commodity options can be substantial, and traders should carefully consider the inherent risks of such trading in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of The Hightower Report is strictly prohibited.

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