Mixed Bag for Corn and Soybean Prices: Watch These Market Signals

11:43AM Nov 08, 2019
Corn, Soybeans
corn & soybean fields
( Darrell Smith & Lindsey Benne )

While American farmers may be hoping for optimism, market analysts’ predictions are mixed. China appears hungry for soybeans for now, but the ethanol market is not fueling corn prices.

Tommy Grisafi with Advance Trading and Brian Splitt with AgMarket.Net discussed their predictions on this week’s U.S. Farm Report.

“I’m more worried about corn,” Grisafi said. “There’s only a few countries producing high quality beans like we are, so when the price gets to a competitive level, we have good demand.”

Corn, however, is suffering internally with government policy for small refinery waivers, Grisafi said.

Splitt adds production reports are giving mixed market signals. While USDA will release final production numbers with acres and yields in January, it may later be revised since harvest could last for some farmers into spring.

“The USDA showed this year they will keep things under their hat until the September quarterly stock report and then revise the feed residual or revise the previous year’s crop to make things look right as they back into their numbers,” Splitt said.

Ironically, he said optimism may actually lie in low commodity prices.

“Prices have hurt demand,” Splitt said. “Now we need the market to come back down and stay at lower levels for a while to build that demand back up.”

A weakening of the U.S. dollar may also signal an export.

“We had a big reversal in the U.S. dollar in the month of October,” Splitt said. “If the dollar has made a major high and that reversal does follow through and we see lower dollar values especially compared to our competitors’ currencies, I think that’s one of the pieces we need to see in order for our export business to really kick into gear.”

Grisafi said he looks to different signals.

“I like watching gold, the 30-year bond, hogs and beans,” Grisafi said. “If you have those four up, you’ll know what’s going on really quickly.”

So what should farmers take away from these signals? Splitt said farmers should turn attention to hedging.

“In soybeans, there’s good carry right now,” Splitt said. “You look at the carry in the corn market now, and it does tell a little bit of a different story and that follows the basis. We’ve seen the spreads tighten up.”

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