Markets Now with Tyne Morgan: Here’s Why Corn Prices Still Have Room to Climb

While volatility seems to be a vibrant theme in today’s markets, both corn and soybean prices have failed to make new highs. The March corn contract is only 10 cents off its highs, but March soybeans are trading nearly 60 cents below its high hit in mid-January.

So, could a short-term top be in for the corn and soybean markets? Analysts on U.S. Farm Report this weekend say it depends.

“I think that what we need to do is realize whether the futures are going to lead us higher or the cash market's going to lead us higher, and at some point in time that that leadership role is going to change,” says Brian Grete for Pro Famer. “I think for now, we still have upsides in the futures. But really, as we move through the marketing year, it will be the cash market that has to decide things and really provide the leadership.”

Matt Bennett of AgMarket.Net says while the market is trading in the $13 range for soybeans, USDA is set to release its next monthly report next week. Typically, the February USDA report isn’t dynamic, but Bennett says that could change this year. And it all boils down to what USDA does with its China import forecast.

“The thing is Tuesday, you have a big report out,” says Bennett. “You're going to address the carryout levels and exports need adjusted. I don't know exactly how the USDA is going to handle them. I don't know exactly what they thought they were already dealing with as of January. But for me, I have a hard time believing as far as corn is concerned, that we've seen the highs in the market.”

Bennett says since soybeans are trading further from the highs set in January, it may be tough to make new highs in soybeans in the near future.

“But at the same time, a lot of it's going to depend upon what's going on in South America,” adds Bennet. “My personal opinion is that corn is not done. But as far as beans are concerned, I think a lot can depend upon what happens in South America. Do we see any additional sales? There's a lot of things that can factor in there.”

Grete thinks USDA is going to have to make a move when it comes to China. After a record week of corn purchases to close out January, Pro Farmer thinks adjustments are needed on USDA’s balance sheet.

“I think they'll add in the 100 million that they took out last month that they shouldn't have,” says Grete. “When you look at 2.65 billion bushels of corn exports for the 2020/2021 marketing year, you have to go at a record pace to get above that level. So, it's really easy to plug big numbers into the balance sheet for exports. But it's harder to get there by actually shipping them by the end of the marketing year. And I think that that's the key. It's not how many we can plug into the balance sheet right now. It's how many we actually get shipped by August 31.”

Bennett thinks there is some nervousness when it comes to logistics, but he doesn’t see China rolling the shipments into the new crop marketing year at this point.

You can hear the complete marketing discussion on U.S. Farm Report this weekend.