Analyst asks if corn, soybean markets will get sold into harvest

After a very bullish August USDA report, it seems the speculative and professional traders are determined to sell this market off into harvest now.  

It’s funny, but the market has a way of making the most people wrong most of the time, and that seems consistent with the bullish August USDA report in front of harvest. Why pay more for grain that farmers will sell off the combine anyway? That seems to be what the market has decided. There are some very good yields likely in the eastern Corn Belt - and they’ll be selling at the highest prices in over seven years!  So expect some fairly aggressive farmer selling in areas with good yields.   

Weather includes remnants of Hurricane Ida pushing inland, with Kentucky, Tennessee, and states east and north of there likely to get excessive precip the next few days. Another wet area the next week is the northwest Corn Belt including North Dakota, South Dakota, Minnesota, Wisconsin, Michigan, and Iowa, which will see above normal precip as well. Minnesota, along with most northwest states, needs rain as soils remain parched, but Wisconsin does not because there is isolated flooding in locations as the wet weather since mid-June has turned into a deluge lately. Wet soils just can’t absorb more water. Harvest will be 
difficult in Wisconsin and parts of Michigan if this continues, and you might as well include land affected by Hurricane Ida in the Delta.     

We seem to be sliding lower every day, as higher night trade slides into lower day trade each day as corn/soy harvest approaches. Why pay for grain that farmers will sell at harvest anyway? Again, that seems to be the logic of this market, so prices slide lower.

Weekly crop progress/conditions Monday, 8/30, showed unchanging corn/soy conditions, corn unchanged at 60% rated G/E (vs. 62% last year), and soybeans unchanged at 56% G/E (vs. 66% last year).  

Pro Ag yield models rose slightly, with corn up 0.56 bu/acre to 178.4 bu (vs. 174.6 USDA), and soybeans +0.19 bu/acre to 48.78 (vs. 50 bu USDA). We show the corn crop considerably better than USDA August numbers (+3.8 bu), but lower soybean yields (-1.22 bu/acre). The corn crop will likely be better than USDA guesses, and soys worse based on the current situation.  

Soybean yield last year was 50.2 bu/acre, and conditions are 10% LOWER than last year. Corn yield last year was 172 bu/acre, and conditions are 2% lower than last year. Soybeans seem the furthest off, here, so it might be the best bullish bet going forward based on yield potential.  

Soybeans are 2% ahead of normal dropping leaves (9%), and corn is 91% in the dough stage (2% ahead of normal), 59% dented (4% ahead), and 9% mature (1% behind).  

We note that while soil moisture levels gained 3% topsoil (to 53% rated adequate/surplus), and +2% subsoil (to 51%) the corn/soy crop conditions remained unchanged. That’s because this crop is moving beyond the stage where rain can help it – the only thing now is that excessive rain could hinder harvest. This is not possible in the northwest Corn Belt since soils are too dry, but in the east it could happen (and likely has in the Delta path of the hurricane).  

We note that while weekly corn and soybean charts look like they’ve formed a top around $7.70 corn and $16.50 soybeans, wheat is still headed higher with the outlook greatly enhanced by the bullish USDA August report. On daily charts, neither corn, soybeans, nor wheat look like they’ve formed a top. How can that be? Remember the market discount that futures spreads showed relative to the May corn/bean contracts?  

May corn topped around $7.76 (matching 2008 highs), but Dec. corn didn’t make it to $6.40. While May soybeans ran to $16.77 (also matching 2008 highs), Nov. soybeans barely touched $14.80. Could it be corn runs above $6.40 again, and soybeans above $16.77 again this coming year?

Will wheat run back to 2012 highs? Ironically, we might see 2022 crop values at these levels yet sometime in 2021/22.

 Like Yogi Barra used to say, “It ain’t over till it’s over!”    

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Saturday morning webinar
 
View our Saturday 7 am 10 minute update at www.progressiveag.com/videos : This week's topic: "Another higher run post-harvest?"  

Ray can be reached at raygrabanski@progressiveag.com.  
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Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country.  See http://www.progressiveag.com for rankings and link to data from Top Producer Magazine and Agweb.com. 

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