Market volatility was the headline for corn and soybean prices once against this week. After markets closed in the green after USDA’s May WASDE report on Wedensday, corn traded limit down on Thursday. While corn struggled to post gains again Friday, soybean prices managed to close in the green.
Corn prices struggled to end the week, despite the ongoing buying spree from China for new crop corn.
As the extreme volatility and extended price limits played out, Joe Vaclavik of Standard Grain says the main issue traders are watching are possible changes to corn acreage this year.
“There are a few factors that I see is as being negative here,” says Vaclavik. “First off, I think the market is starting to realize that corn acreage here in this country is in all likelihood going to be substantially higher than what USDA told us it would be back in March. So, traders and analysts are adjusting their new crop corn balance sheets to account for a much larger acreage number.”
Vaclavik says what that number will end up being is still in flux, as traders wait for a clearer picture in USDA’s June acreage report. However, some estimates point to above 94 million acres of corn as prices and dry weather allowed farmers to possible plant more corn this year.
“The other thing would be the crop report in regard to Brazil,” he adds. “USDA dropped their Brazilian corn estimate in WASDE, the Brazilian government only dropped it by a very small amount. So maybe that was seen as being a little bit bearish, as well.”
As farmers possibly plant more corn this year, it’s also setting up a scenario for bullish soybean prices. Yet, the market volatility is here to stay.
“I think the other thing you have to build into this equation is that, as we came through the report, there was all of this pent-up anxiety, excitement, enthusiasm,” says Mike North of ever.ag. “And whenever you come through the numbers, and finally put them behind you, you look around and say, ‘okay, what’s next to talk about?’ And there really wasn’t anything new.”
North says the charts also indicated prices may have been a little overdone.
“In any market movement, you need setbacks like this enabled to in order to ultimately keep them alive and keep them healthy,” adds North.
