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Can Hope Rally Corn and Soybean Prices?

by Archer Financial Services | Oct 06, 2017
By Chris Lehner
To learn more about Chris, click here 
   

Across the Midwest billboards are popping up showing fields of corn and soybeans. Across the signs, “Hope for Higher Prices!”

Of course, there aren’t billboards going up. But there are certainly corn and soybean farmers that wake up every morning that hope corn and soybean prices rally and have trouble sleeping because they aren’t.

Even on the days when futures do move off of lows, selling remains light because the cash basis is extremely wide. For most farmers it’s the main reason they aren’t selling. Corn priced at $2.85 or lower is common and soybean bids at .75 to .80 cents under the board are easy to find.

Prices going lower shouldn’t be a surprise. If you noticed over the last week, there were not many blogs or articles complaining about the results from the September 29th USDA Grain Stocks Report. As analysts tried to build up bullish stories over the summer, farmers knew what they stored. When old crop sales normally occur in July and August, farmers decided to wait and sell old crop when the supposed low yielding new crop would be delivered.  It was obvious in September when grain buyers that normally see a big pick up in cash deliveries had days where deliveries were next to none.

The Grain Stocks Report should be a loud alarm going off. Below are the highlights of the September 29th, 2017 and September 31st, 2016 reports.

Even if 2017 yields are down and so far, soybeans yields are better, will lower yields help prices? It is very doubtful with all the old crop available.

 

USDA Grain Stocks Report September 29, 2017

Corn Stocks Up 32 Percent from September 2016 totaling 2.29 billion bushels

            On farms at 787 million bushels, up 25 percent

            Off farm stocks at 1.51 billion bushels, up 36 percent

Soybean Stocks Up 53 Percent from September 2016 totaling 301 million bushels

            On farms at 87.9 million bushels, up 112 percent

            Off farm stocks at 213 million bushels, up 38 percent

 

From September 30, 2016 Report

As of September 1, 2016, corn totaled 1.74 billion bushels,

            627 million bushels are stored on farms

            Off farm stocks at 1.11 billion bushels

On September 1, 2016, soybeans totaled 197 million bushels

            On farms totaled 41.6 million bushels

            Off farm stocks at 155 million bushels,

I would like to hear your comments. Please email me at chris.lehner@archerfinancials.com or call 913 787 6804    

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. Past results are not indicative of future results or performance. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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