Carl German, Extension Crops Marketing Specialist; clgerman@udel.edu
Will U.S. Produce Bumper Corn and Soybean Crops?
The Pro Farmer crop tour is taking place this week. Crop scouts will be making their annual U.S. corn and soybean crop production estimates on Friday afternoon after the market closes. A quick review of scout reports thus far on corn yield estimates and soybean pod counts suggests a high degree of variability in crop development and potential yields with the qualifier being the length of the growing season. If Mother Nature allows ‘09 row crops to mature, then crop production is likely to be record or near record. Since the U.S. is certain to have plenty of corn and soybeans on hand going into harvest there isn’t much, if any, reason for commercial users and/or speculators to bid prices higher until more is known concerning actual crop size. My theory concerning the August 12 crop report being more positive than negative held water for about one day of trading before prices turned negative. Outside market forces have also influenced corn and soybean prices to the downside this past week.
The top five U.S. corn production states are Iowa, Illinois, Indiana, Nebraska and Minnesota. Iowa and Nebraska are likely to have better crops than last year. In Illinois, typically the nation’s second largest corn producer, crop conditions are highly variable, as is the case in Indiana and probably Minnesota. The question remains: Can the U.S. meet or exceed USDA’s August corn and soybean production estimates of 12.761 billion bushels for corn and 3.199 billion bushels for soybeans, 159.5 and 41.7 bushels per acre, respectively? We will have a firmer grip on the answer to that question within the next two to three weeks.
Market Strategy
In the near term we can expect outside market forces (Dow Jones Industrial Average, crude oil prices, dollar) to heavily influence the direction in commodity prices. We might even garner a slight rally due to markets becoming oversold. Dec ‘09 corn futures are currently trading at $3.21; Nov ‘09 soybean futures at $9.46; and Dec ‘09 SRW wheat futures at $5.01 per bushel, with Dec ‘09 corn and wheat futures recording new lows this week. Nov ‘09 soybeans were trading near $1.00 per bushel lower a month ago. Although export and feed demand for corn and wheat are rather anemic, China is still purchasing U.S. soybeans. In fact the sleeper in these markets may turn out to be drought reduced corn and soybean production in China this year.
For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.