Corn prices only gained 3 cents during the month of August, despite strong gains in soybean values and crude oil prices.
Prior to the USDA supply/demand report on Sept. 12, the analytical firm Informa Economics forecast the 2013 U.S. corn crop at 14.013 billion bushels, reflecting an average yield of 157.2 bushels per acre.
The USDA is currently estimating the U.S. corn crop at 13.763 billion bushels, with a yield of 154.4 bpa.
The trade will be looking for the USDA to slightly increase its production figures due to good early harvest data.
The USDA should be conservative with its estimate as it will most likely wait until more yield data comes in prior to making a major adjustment to its crop estimates.
From the demand side, look for USDA to leave ethanol and feed usage unchanged, while slightly decreasing exports.
This will create slightly larger ending stocks for corn, which are already burdensome.
Corn prices should slide lower into harvest, barring a surprise announcement from the USDA.
Harvest data will determine the long-term direction for the corn market.
If prices begin to firm, watch the downtrend lines on the daily charts for a technical breakout as that will be a buy point for the fund traders.
August was a bullish month for soybean prices as soybeans closed the month with $1.51 gains.
In our August outlook, we predicted if the last half of August was hot and dry, prices would soar higher.
This is exactly what happened as yield prospects were robbed from soybeans due to the heat and dryness.
Informa pegged this year’s U.S. soy harvest at 3.239 billion bushels, with an average yield of 42.4 bpa.
USDA is currently estimating the U.S. soybean crop at 3.255 billion bushels, with an average yield of 42.6 bpa.
The USDA will provide traders with the next glimpse of market information on Sept. 12 with the monthly supply/demand data.
The trade will be looking for the USDA to slightly decrease their production figure due to declining crop condition ratings during August.
The USDA should be conservative with its estimate as it will most likely wait until yield data comes in prior to making a major adjustment to its crop estimates.
From the demand side, look for USDA to leave crush mill usage unchanged while slightly increasing exports.
This will create slightly smaller ending stocks for soybeans.
Soybean prices could dip on profit-taking ahead of the USDA supply/demand report as traders will be scared of losing profits on long positions due to a surprise from USDA.
Barring a major surprise, look for rallies to be sold by traders as they want to take profits ahead of the upcoming harvest and reposition when yield results become known.
This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.
Brian Hoops can be reached at (605) 660-1155.
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