Grain end lower again on Wednesday with continued fund selling.
New crop corn and soybeans both tested chart support and December corn closed just above $4 with November soybeans coming within a cent of the contract low before recovering to close 10 cents lower at $10.18 3/4.
Matt Bennett, AgMarket.Net says the pressure in corn and soybeans stems from growing yield ideas and bigger crops in the upcoming WASDE, favorable weather and the lack of China export business.
Average report estimates show an increase in yield of 182.2 bushels on corn and 52.5 on soybeans and Bennett thinks that will be confirmed in the August 12 report especially with the high crop ratings.
He adds, “USDA almost always raises yield in the August report.”
The question though is will USDA offset higher yield with lower acreage?
Bennett says he’s not sure if USDA makes those cuts in August and if they do how much acreage could be lowered.
“If you do lose some acres I don’t think it will be substantial and I highly doubt it will be enough to offset the increase in yield,” he states.
So he fears there could be more price pressure ahead for corn similar to 2014.
“What did we do in 2014 because we’ve mirrored 2014 quit a bit over the last few months. Corn went all the way down to $3.18. I mean I don’t think we’re going to see that happen I’ll say that. But could we make a run at well below $4 levels some where closer to $3.50? I think it’s possible,” he adds.
Soybeans are also in jeopardy of lower prices due to rising U.S. and world stocks and the lower export demand for U.S. soybeans from China.
