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Crop weather problems could keep corn, soybean prices higher longer
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.
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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