The market remains on edge with uncertainty about what the weather and the next big USDA Supply and Demand report will bring on July 12.
“It’s pretty quiet around here today,” Jack Scoville, analyst with Price Futures Group, said July 10, adding the action will come once the report hits.
The market fully expects that the USDA is going to make some modifications based on the acreage report, Scoville says. The USDA is open to modify yield this month. They don’t have to, but with the weather being less than perfect, they might, he says.
“There has been some rain in some areas, but it has been hit or miss,” he says.
However, the USDA is high on the trend line for corn yields, so they certainly could knock yields down a notch, he says.
“It’s got the market on edge,” he says.
Meanwhile, demand for corn and soybeans, especially for export but also domestically, is very weak, Scoville says. On the other hand, biofuel demand has been super for soybeans.
“We need to see better demand,” Scoville says, to get to higher prices.
Likewise, Don Roose, president of U.S. Commodities is focused on the impact the Supply and Demand will have. He says the government footnote in the latest WADSE report showed 8.221 million more acres were to be planted. That leaves the question of how many more of those will be corn, soybeans or something else, he says.
“This is one reason beans took a header down last week,” he says. “At the same time, the question remains what will the yield be?”
There are also some interesting price relationships right now. Brazil’s corn prices have been low this year, but after selling so much to China, prices are rising. Another interesting twist is because of the dryness in western Canada affecting oat prices, which are reaching record highs, December corn and December oats are only 58 cents difference, which is a rarity. Corn is usually much higher, Roose says.