Now that everyone knows the answers to how many acres of corn and beans were planted and how big the stockpiles are, what’s the next big question for markets?
Weather, according to analysts. “The market told us that weather is a much bigger deal than (Thursday’s) USDA (acreage and grain stocks) news,” observed Rich Nelson, chief strategist for Allendale, in McHenry, Ill.
Now the trade is focused on how the forecast might affect the yields--and by extension, the prices--for corn and soybeans.
For better or worse, "weather is great right now,” with cool temperatures perfect for corn pollination forecast for Iowa, Nelson said. But by Thursday, weather forecasters are predicting a temperature increase of 25 degrees.
Meanwhile, if August weather concerns threaten soybeans, it could trigger an even greater bull run for beans, Nelson predicted.
In terms of demand, the market continues to expect strong U.S. soybean exports to China, according to Don Roose of U.S. Commodities in West Des Moines, Iowa.
“Probably the most interesting is how we reacted to soybeans," Roose said, referring to the USDA data released June 30. "The report was actually negative. (The market's response) shows our respect for weather and our respect for continued demand from China."
But he too will be watching the weather. “As crops get closer to seeing a crop in making, we can define yield, “ Roose said. “There’ a premium if we’re not sure of a crop.”
So what should farmers do? In the corn market, take the stairs up and the elevator down," Roose said. "Do risk management in beans."