Wet weather in the western Corn Belt has soybean producers worried they won’t harvest the record-breaking crop on time. On U.S. Farm Report, Tommy Grisafi of Advance Trading, Inc. said while there’s technology to work around the clock, there’s no piece of machinery that can go through the mud and harvest the crop. He credits the wet conditions to the current soybean rally.
“I think that’s part of the reason soybeans have rallied this high,” said Grisafi. “Although it’s a record crop, it comes in a little more organized than this corn crop coming in the back [that’s] a bit chaotic.”
The soybean rally can be also be credited to a higher demand for soy oil. As for the long-term effects of this soy oil carry, Mike North of Commodity Risk Management Group says it isn’t sustainable.
“The reality of it is we’ve gotten a little drunk on the fact the exports have been very strong, and that has to be the case this time of year,” said North. “The palm oil [can’t] carry it forever.”
As for corn, Grisafi said the last time December corn contracts traded above $5 was May 13, 2014.
“Once bushels show up, the perception and the reality in getting back to merchandising—not flat-price speculation—the farmer starts to deal with the bushels,” said Grisafi.
North noted the “comfortable zone” for CRMG is between $3 to $4.50 per bushel. Around this time last year, he said there was talk of a 1.7 billion bushel carryout. Today, it’s between 2.3 and 2.4 billion bushels, and that’s with record exports, feed, and ethanol built into the equation.
“If the rally is going to continue, you should look for resistance as we approach $4,” said North. “The fact that we’re lower is only a function of the added supply.”
Watch Grisafi and North on U.S. Farm Report above.