How far can soybeans pull up corn?
May 27, 2009
The corn crop is getting planted and the bean plantings are not far behind. Limited rain fell over the last couple of days in the eastern Corn Belt allowing the corn and bean plantings to proceed at a fast rate. As we move into June, the market will move away from concern about getting the crop planted back to what we have in the bin and what type of weather we are experiencing in regard to yield performance.
While it’s still early, the implications I’m getting from our weather man is it’s not going to be an exceptionally dangerous growing season until we get to fall. So I believe the real drivers now will be the June USDA Supply and Demand report, which should indicate exceptionally tight old crop bean supplies, and the final planted acreage report due out the end of June. My expectation right now is corn acres will be down close to 2 million and bean acres will be up close to 3 million.
What does this mean to the markets? I continue to believe beans will be the dominant commodity for the next couple of months. Granted the November contract was strong today but this will only be a short term situation. Once we get into June, the old crop beans should dominate. The issue is how much can beans pull up corn? We also need to remember that wheat will be harvested in the late June to early July which should be a drag on corn to the downside. In summary: I see a sideways price action in corn and only moving higher if beans can extend their rally above $12 in July beans.
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