The September USDA Report Indicates Upside Price Potential Moving Forward
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Market Commentary for 9/17/22
Corn
Last week’s USDA report showed corn carryout may end up being one of the tightest since 2012. While the yield estimate dropped to trade expectations, the USDA also decreased the harvested acre estimate by another 1 million. This is nearly equivalent to lowering the national yield by another 2 bushels per acre.
While this is good news for producers, and could mean the tightest carryout in a decade, it does not guarantee the market will eventually trade above $8. Higher prices may restrict global demand. With worldwide recession concern, and the US dollar at a 20-year high, corn usage around the world may ration itself at these price levels.
Seasonally, the market usually pulls back as harvest moves north in late September. Therefore, the market may be range bound for the next 4-6 weeks between $6.50 and $7.00 until more is known about the actual size of this year’s crop.
Beans
For beans, the USDA decreased the yield estimate below what most in the trade expected. Currently, next year’s carryout estimate looks to be the lowest in 7 years. Like corn though, global bean demand is still uncertain.
In the short-term, the upcoming US harvest should keep pressure on prices through at least mid-October. Long term, the potential size of South America’s next crop will dictate price direction, any weather issue in the southern hemisphere in December or January could mean explosive bean prices.
Bottomline:
This month’s USDA report was favorable to producers, but moving forward, demand will be heavily impacting prices.
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Jon Scheve
Superior Feed Ingredients, LLC
