USDA and the Pro Farmer Crop Tour are projecting near to record corn and soybean crops in states like Illinois and Iowa, plus nationally.
So in years with bumper crops when do the markets seasonally put in lows and is it possible they could bottom early?
Darin Newsom, Senior Market Analyst with Barchart, says, “Normally what happens this time of year is both December corn and November soybean futures continue to move lower. So just from a time standpoint we usually see this sell off last into September based on just weekly closes only. So, again there is time for these markets seasonally to move lower.”
However, he also looks at the degree of seasonal price movement and both corn and soybeans have moved well past what they tend to do both five year and 10-year.
“So, from a price point of view maybe we’ve seen as much seasonal damage as what we tend to see if not more, but its just that time component that continues to work against the market,” he adds.
In past years of record crops there have been times the market has put in seasonal lows ahead of harvest as the most bearish news is already factored in.
Is that possible this year?
Newsom says. “It is possible. If we look at another study looking at price distribution over the last five years it shows both December corn and November soybeans, the futures have moved into the lower percentages of their price ranges. So, this could be viewed as an undervalued situation.”
That means the markets may have built in the worst case scenarios.
“That could start to bring some buying in but as of right now we’re not seeing it,” he explains.
