Soybeans saw fresh export sales again this week, while drier weather is expected to take shape in the western Corn Belt over the next 10 days. Big news on the political front also drew major attention this week.
So, what’s the market watching right now? It may be a combination of all three, according to analysts.
“I think it’s weather, first and foremost, maybe a little bit of demand as well,” says Chip Nellinger of Blue Reef Agri-Marketing. “Our export sales on corn have been really strong, actually quietly strong for quite some time. In fact, USDA on the July crop report bumped up their demand a little bit. But in my mind, it’s all about weather, and the fact you just went too far to the downside.”
The market saw some life on Thursday before seeing pressure on Friday. Nellinger says on Thursday, part of the support to prices was the fact prices arguably went too low.
“When you went too far to the downside, it got the funds loaded up with record shorts,” says Nellinger. “We seem to have forgotten that we need to get through August and get a couple more rains and make sure it doesn’t get hot and dry anywhere before we have these record crops in the bin. And I think the market has got a little too too far ahead of itself.”
The other factor this week was the extended forecast, which showed dryness and heat.
“You look at the forecast in the Western Corn Belt, and it’s going to be awfully warm. It looks like it’s going to be dry for at least ten days,” says Brian Splitt of AgMarket.net. “So, then you have the eastern Corn Belt and the central part of the Midwest where we’re likely to get some of these ridge riding storms, and we saw that earlier in the month. When there’s a lot of activity in the atmosphere, they tend to not show up on the forecast. But then once they, start seeing those storms develop, they stick around for a while. So we’ll see if that’s the case.”
Splitt points out the evolving and changing political arena is also catching the attention of the markets. Just this week, President Biden announced he’s not running for re-election, and that stirred up the markets.
“I do think there’s a little bit of a political element to this,” says Splitt. “When you think back to after the debate, the narrative was that things were really going well for Trump in terms of polling,” says Splitt. “We had the assassination attempt, and then all of a sudden, Biden drops out and Kamala Harris is the presumptive nominee. And so I do think there was some discount into the market because of the idea that if we did have Trump win a second term, that we could see some, trade war potential again and tariffs. And that might impact future buying.”
Splitt points out the flip said of that is if the Chinese believe Trump could win a second term, it’s possible they come in and start buying ahead of the November election.
“Chip nailed it on the head, though. Prices went down, you hit some major support levels, you went down a lot. So you think about soybeans and the July high to the lows that we just made last week, that was a little over a buck. And as of earlier this week, we’ve already taken half of that back in a few days,” says Splitt.
He points out technically, the trend to watch is how corn finishes the month.
“If we can get these corn to make new highs for the month, late in the month and have August highs above the July highs, maybe we’ll get a little more short covering, but the funds have been very cautious about how they cover shorts. A lot of days this week, it’s been buying from 8:30 a.m. to10:30 a.m., and then they just stop buying and we fizzle back down.” says Splitt.
Catch the complete conversation with Splitt and Nellinger in this weekend’s marketing roundtables.
