Hidden Story in Soybean Market, Possible 45 BPA Average Yields

October 26, 2017 02:40 PM
 
 

There hasn’t been a lot of movement in either the corn or soybean markets lately, and the corn market especially looks dismal.

The USDA keeps reporting that there’s still a lot of corn in storage, but that might not be the only thing keeping prices down. Andy Shissler of S&W Trading thinks the story in corn is the lack of trading interest and the funds are heavy short, close to 200,00 short. He says he doesn’t expect to see that change for a while.

On the other hand, he thinks soybeans has a hidden story. The soybeans that were planted in April are showing strong yields, while the soybeans planted or replanted in the middle of May are seeing a 5 to 20 percent drop in yield.

“Regardless, you’re going to have a really nice dynamic market in beans show up,” said Shissler on U.S. Farm Report. “To be at $10 [per bushel] during harvest is really good and shows that it can be a really strong market.”

Mark Gold, executive team member of Top Third Ag Marketing, thinks this dynamic market advises farmers to buy call options for anything sold from the field by the first of November. He thinks the corn market will be “a mess for a while.”

“I don’t know how you solve the problem of 2.3 billion bushels if we put those corn acres back into corn that we lost this year and we have normal weather next year,” he said. “What’s carryout going to go to? You’ve got to be careful if you’re storing corn hoping for higher prices.”

Gold believes there will be another reduction in yield, saying the government is predicting a bigger yield that what’s expected, which will cut into carryout. Shissler thinks there will be “pipeline stocks” for soybeans in 2018. He thinks final yields could be between 45 and 47 bushels per acre. Gold thinks that number is too low, saying 48 to 49 is more in the ballpark.

Watch their full comments above on U.S. Farm Report.

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