When Will Corn Reach $4, Soybeans $10?

October 3, 2016 04:14 PM

USDA released its quarterly grain stocks report Friday, showing promising numbers for wheat, encouraging numbers for soybeans, and favorable numbers for corn. Compared to September 2015, corn stocks rose slightly, soybean stocks rose 3%, and all wheat stocks are up 21%.

While harvest is underway, analysts are already forecasting acreage for spring planting. Chip Nellinger of Blue Reef Agrimarketing told Tyne Morgan on U.S. Farm Report over the weekend to 500,000 fewer wheat acres in 2017. 

He also believes that trend could be seen on the corn side. A few months ago, farmers were talking 2.4 to 2.5 billion bushels of carry compared to 2.3 billion currently. Bryan Dohtery of Stewart-Peterson predicts if yield drops from 174 to 170, there could be a July rally of $4 or higher. 

“Historically, the last 10 years, July corn futures have rallied at a minimum to $4.35,” Dohtery says. “With that 10 years of history, once we get through this harvest season, be a little more optimistic.”

Nellinger backs his claim, saying to wait and see what the USDA’s October report and the final January crop report say. It’s also important to pay attention to South America during their planting and growing season because that could increase U.S. soybean prices.

“It’s a safe assumption the demand from China is going to continue to be as good as it has the last couple years,” Nellinger says. “Any little weather problem in South America during our winter, you could get back north of $10.50 on beans.”

These prices are to be driven by a worldwide increased demand in both corn and soybeans. According to Dohtery, Brazil is increasing its soybean acres, but by the lowest increase in 10 years. 

"If you're not maintaining or increasing your size of crop, there are going to be some consequences," Dohtery says. "That's higher prices."

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Spell Check

Mitchell, SD
10/4/2016 08:14 AM

  Really?........and beef (live) above $1.35, and hogs back above 80, and milk at $24? Just what unpriced producers need to be reading........and then sitting on their hands while on their winter vacation in Jamaica. A lot of things happened in the last ten years to give us those "summer bounces", rallies.....(mainly a couple of droughts and oh, the thing called ethanol?) and benefitted those producers who had no marketing plan, but got (extremely) lucky with the high summer prices. We did NOT have these kind of inventories then. Reminds me a lot of the later 70's.......can never feed the world, plant fence row to fence row, plow up the CRP.....or back then the "idle acres" land, (soil bank). We also remember captain Kirk's summer of 2016 prediction. Oh well.......getting off my soap box!!

Greensburg, IN
10/4/2016 08:14 AM

  Love their optimism, however a 168 bpa while possible, the reduction in production will not be carried to the bottom line (carryout), demand will be reduced as price rises. We will be hard press to break below 2.0 billion bushels carry-out. I believe the best opportunity will be IF & WHEN the large funds exit their short positions. I am not waiting for calendar to turn to summer like last year. This crop doesn't look like it will store very well. Sell the short-covering rally & go buy July calls if you feel the need to remain long. Bean crop looks to be huge. Don't see a $10 in front of beans unless our brothers in South America have problems. And just like wheat there's has to be some ethnic cleansing in the corn market on acres. I won't be surprised to see 3 million switch back to beans next spring. The lenders are not going to be so cooperative.

Dodge City, KS
10/4/2016 10:16 PM

  What about 2017? Are we still going to see if we can get those ground piles even larger? Set a side is the only answer. If you don't set a side , you have nobody to blame but yourself. www.afairmarketprice.com


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