The Story Not Enough People Are Talking About, And It's Why Corn And Soybean Prices Are Stuck
U.S. Farm Report 10/28/23 - Roundtable 1
Corn and soybean prices seem stuck. While there’s small fluctuations day to day, corn prices look to be comfortable around $4.75. So, what catalyst could it take to move commodity prices higher? There are a few, but analysts say the reality is there’s simply no story within the corn and soybean markets at the moment.
“The story that I see is kind of a lack of a story,” says Joe Vaclavik of Standard Grain. “Where's the catalyst for a bull run in these markets? I know that's what everybody wants to see. We want to see higher corn prices, higher soybean prices and higher wheat prices. I just don't see the catalyst for that sort of thing right now.”
What would it take to propel prices? Vaclavik says it all comes back to supply and demand.
“What do we need? Maybe you need South American weather. Maybe you need the river to improve and generate some demand. I don't know what it is, but we need a catalyst and we don't have it,” he says.
The "Better-Than-Expected Yield" Story Continues
Peter Meyer of Muddy Boots Ag agrees with Vaclavik, and he’s been talking about it for weeks. There’s just no story to generate price movement. And the U.S. drought story ended up being not much of a story in terms of yield.
"I completed about a 3,000-mile trip out to Iowa and back last week, and the dreaded, ‘better than expected yield' story, especially in corn, rears its head once again,” says Meyer." Joe made a reference to some people talking about 2008. A lot of people are referencing 2018 and making that a story as well, where yields were down two [bu. per acre] in October, then down two [bu. per acre] in November. I would tend to doubt that's going to happen this year.”
Instead, Meyer says similar to what farmers are seeing with prices, crop yield estimates are fairly static this year.
“Maybe we go up to 174 [bu. per acre national yield] or something like that. But the fact of the matter is, when you look at 2018, we had about 450 million bushels in extra export demand than we do now, and that's a big part of the problem,” Meyer adds.
Meyer says during his crop tour last week, the “better than expected” yield story played out, and the takeaway from 2023 may just be how impressive corn yields ended up being, despite this summer’s drought.
“I am beyond impressed with yields,” says Meyer. "I met with a few guys in central Illinois who got two rains in the summer and are still pulling 250 [bu. per acre] out in corn. They're only down 10 or 15 [bu. per acre] from last year. In Eastern Iowa, I've spoken to some farmers there that have readily admitted that they've never miss estimated a crop as big as they did this year. It is remarkable what the corn yields have turned out to be with so little rain,” says Meyer.
What the Market Is Watching Now
The impressive yields was the story of the markets earlier this fall, but Vaclavik says that’s not the story anymore.
“As you move forward, the story is going to be South America. South American weather demand, 2024 acreage, the economy, things along those lines. I think that generally speaking, we trade row crop yields in June, July and August. It's almost the end of October. We're past that story, barring the USDA making some kind of out of the ordinary touch change here, I think.”
