Markets fell Tuesday, pushed downward by reports of massive global supplies of corn, soybeans and wheat.
Analysts said prices were likely to stay low without a weather problem to dent supply of the pending 2016 crops.
In early trading, December corn fell 7.75 cents to 331.75, and November soybeans dropped 19 ½ cents to 944.76. Kansas City hard red wheat was down 9.2 cents at 414’2.
World supplies were put at near-record highs by USDA Monday in its September 12 World Agricultural and Supply Demand Estimates. Global ending stocks for new crop wheat were put at 249.07 MMT, while new crop corn carryover was estimated at 219.5 MMT, and soybeans were put at 72.217 MMT.
“The wheat market already is at a low Richter scale level,” observed Don Roose of U.S. Commodities. However, demand will suffer if prices rise, he adds.
“If we don’t have a weather problem in the long-term picture, you’re in a situation where somebody has to cut (planted) acres,” Roose says, adding he hopes that scenario will not play out.
Producers, facing storage costs, are feeling the pain of too much of a good thing.
“It looks as if prices will struggle for the time being,” noted Larry Shonkwiler, of Advance Trading in Bloomington, Ill. “The focus will likely turn to the producer to see if he/she is inclined to sell more or less than the usual fall amounts, given that storage space could be at a premium this fall."
The global wheat glut will likely continue to pressure corn prices, Shonkwiler adds.
“The corn carry-out could be understated if the market really fed as much wheat as the USDA is forecasting," he says. "There is a lot of poor quality wheat (read: feed) around the world, and this could have a negative impact on U.S. corn exports."
And, Roose notes if prices fall below the cost of production for long enough, some farmers may even end up allowing some acres to lie fallow next year.