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Market Commentary for 8/20/21
Corn Outlook
In 12 of the last 15 years December corn futures have had a pullback in August or September. This seasonal trend is usually due to several factors:
- By this time of year, weather’s impact on corn yields is limited as the crop approaches maturity
- Farmers tend to sell off the last of their old crop still sitting in the bins
- Harvest is approaching, so an influx of new supply will be available soon
This year is no different. A few farmers still clinging to the hope of record prices are likely moving the remaining corn out of their bins as we approach the harvest of a new crop. This is likely leading to a small pull back in the market.
National yield estimates are still uncertain as the eastern belt may still potentially increase yields while late-season dry weather has negatively impacted the west. Traders are now turning their eyes to the September USDA report for yield trend direction.
It’s unlikely end users have covered much of their usage needs for fall and winter. Many were expecting trendline yields and a price pullback after the August USDA report. Any dip in the market will likely be seen as a buying opportunity to get coverage on through the end of the year.
In 10 of the last 15 years corn futures ultimately rallied from their August or September lows at some point during or immediately after harvest. Strong export demand, or a further yield decrease could turn the market higher.
Bean Outlook
Beans took some hits at the end of the week. The futures market was “spooked” by headlines in the news that the EPA wanted to shrink biofuel mandates for 2021 due to less overall demand last year. However, it’s likely commercial traders had already anticipated the demand change, and many traders believe these numbers are already figured into USDA demand estimates for next year. Also, there are indications the EPA plans to suggest increasing 2022 mandates to levels higher than 2020 and 2021. There is an expectation that these new target levels will be released when their 2021 goals are published.
Recent announcements of new biofuel plants across North America should be seen as positive for prices long-term. But, for the next 2 months many market participants will wait to see what estimated harvest yields will be.
Want to read more by Jon Scheve? Check out recent articles:
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Why Inverse Markets Mean Farmers Should Sell Their Grain Now and Not Later
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Can Beans Rally Back Above $15 Or Are We Headed For $10?
Weather, Exports, & Acres Will Dictate Prices - $4 & $8 Are Still Possible
$4 or $8 Corn? $10 or $20 Beans? It All Depends On Weather And Export Demand
Jon Scheve
Superior Feed Ingredients, LLC
jon@superiorfeed.com
