New crop corn and soybeans ended lower Friday and continue to crack out new contract lows.
Oliver Sloup, Blue Line Futures, says the markets are preparing for higher yields in the August WASDE.
How much is already priced in?
“That’s the million dollar question. I think a lot of it is already priced in but what is going to be the good news to get the funds to cover? I mean the funds are about 300,000 contracts to the short side in corn and that’s a lofty position. I don’t know that they’re really going to push the pedal to the metal on the short side but I don’t exactly think they’re going to cover the short side either unless we get that catalyst,” he explains.
So what could that catalyst be?
He thinks the bearish expectations going into the report are so lofty the market may end up disappointed.
“The average analyst estimates comes in right at 182.1 bushels per acre for corn and 52.6 bushels for soybeans and those are some pretty lofty numbers to meet. It kind of makes me think and question how high is the bar set and is it set too high? I guess that’s too be determined right?”
He says past years have presented more variability and crop concerns but this year there is a lot of good crop out there.
Sloup was disappointed that better export news failed to support soybeans including Thursday’s strong new crop weekly exports and several flash sales on Friday which finally confirmed speculated China business.
“If you can’t rally the market on good news that’s always a caution flag in my opinion,” he points out.
He thinks the soybean market needs more consistent demand and export business to support prices.
