After recovering and trading slightly positive yesterday our markets traded higher again overnight, still trying to stop the bleeding from last week’s debacle. The planting progress report yesterday afternoon (maps below) confirmed that the corn is mostly planted (80% complete vs 68% on average), though some in the trade thought we’d be a little further along. Soybeans meanwhile are going in at a blistering pace, blowing away trade expectations at 61% planted while the average for this time of year is 37%. When you combine strong planting pace with great-looking weather forecasts… this is not friendly to prices.
What is friendly to prices then? Well… we still haven’t done much to slow down corn demand. The USDA announced additional new-crop export sales to both China and Mexico yesterday while ethanol margins are carving out new highs as well. In regards to soybean demand, it’s a slightly different story as the NOPA crush report did show that we are crushing LESS soybeans than we thought which could be a clue that demand is getting rationed. Of course, trying to figure out the Chinese soymeal demand part of the equation is tough, and there have been reports that Chinese hog producers have slashed soymeal rates out of their feed rations. Hard to prove that out from here. Even with the smaller crush numbers though, remember that soybeans have the tightest supplies of all the markets – this tightness should keep a bit of a bid under the market for us.
Big picture, our old crop situation isn’t getting any better – stocks will still be tight heading into harvest, that much we know. New crop??? The jury is still out. While it feels like this market is trying to catch and hold here, with the weather/crop outlook I wouldn’t be surprised to see another leg down at some point. With this volatility, setbacks in price will be viewed as buying opportunities for end-users who are short/nervous while rallies have to be seen as selling opportunities for farmers looking to lock in a profitable year next year. Remember – you can’t go broke selling for profit!!
Corn is 5 to 8 cents higher
Soybeans are 7 to 10 cents higher