Grain Marketing Highlights

Carl German, Extension Crops Marketing Specialist;

Big Crops Get Bigger or Do They?
USDA will release their September supply and demand estimates next Friday. The National Weather Service has predicted warm growing conditions for the next ten days to two weeks in the Corn Belt. Private forecasters releasing their predictions this week are raising their corn and soybean production estimates from month ago levels. In August USDA projected U.S. corn production at 12.761 billion bushels from 80 million acres harvested at 159.5 bushels per acre. U.S. soybean production was projected at 3.199 billion bushels from 76.8 million acres harvested at a yield of 41.7 bushels per acre. This week FC Stone and others are projecting even higher production levels than the ones stated above. If the higher production levels are realized then stocks will rise and prices will respond accordingly. It is possible to suggest that ‘09 U.S. corn and soybean production levels could grow from their August estimates providing the weather holds and a killing frost does not shorten the growing season. It is also possible to suggest that the ‘09 crop may not get bigger due to the impact that an early or even normal occurring frost might have on crop development and yield. It would seem logical that frost concerns are most prevalent in the Northern tier of the Corn Belt. At this point it is fair to suggest that anything is possible. We are projected to harvest big or bigger U.S. corn and soybean crops. The eventual actual crop size is likely to be in line with USDA’s August estimates, give or take a few hundred million bushels.

Market Strategy
Dec ‘09 corn futures haven’t changed much in the last two weeks, closing at $3.24 on August 20 and $3.19 per bushel on September 2, staving off nearby support at $3.10. New crop Nov ‘09 soybean futures were trading at $9.57 on August 20 and $9.51 per bushel on September 2. Support for the new crop soybean contract is near $9.42. Commodity traders have been taking the weather premium out of new crop corn and soybean prices for some time due to the near ideal growing conditions that the Corn Belt has been and still is experiencing this summer. In the event that crop size increases and stocks rise then these support levels will be broken, moving prices lower going into harvest. The pending question then becomes which crop to favor storing: corn or soybeans? Dec corn futures are currently trading at $3.14 and Nov soybean futures are trading at $9.39 per bushel, indicating that prices are now likely to make the next leg lower.

For technical assistance on making grain marketing decisions contact Carl L. German, Extension Crops Marketing Specialist.