AM Comments 07/26/13
Friday, July 26, 2013, 7:51 amSubmitted by: Dustin Weiner
Good morning!
Our corn and soybean futures seem to have calmed down this morning, with both commodities trading steady to a little higher as of this writing. It has been a wild, volatile week for flat price corn and soybeans. The old crop soybean market got smacked around for most of the week, thanks to strong producer selling last week, China rumors about them selling their reserve beans, and a soybean meal market than couldn’t find a bottom. Current cash bean prices for producers are over $2.50 lower than a week ago today.
Yesterday corn followed in the footsteps of the soybean market, and the cash prices imploded. It was almost like the market just now started to realize that there is a corn crop growing in the U.S. – and it will be here relatively soon. The southern part of the U.S. will be harvesting soon and some have already started (in the Delta for example). As every week goes by, that corn harvest moves a couple hundred miles north which makes end users and processors less willing to step up and pay big bucks for old crop corn. Basis is a function of what someone is willing to pay for corn, and yesterday the demand sector’s ideas of what they were willing to pay changed dramatically. They will now wait and see if people holding onto old crop corn sell into it at these levels – if they do, there could be more downside. If not, we should see a recovery. Current cash corn prices for producers are almost $1.50 lower than a week ago today.
It is important to note that there is still an inverse between old crop and new crop. Right now old corn is worth around $1.20 more than harvest corn. Old crop soybeans are around worth around $1.40 more than harvest soybeans. So while the massive inverses did get chopped in half this week, there is still a large incentive to bring old crop to market this summer and not drag it into the lower harvest prices this fall.
Opening Calls
Corn steady to 1 cent higher
Soybeans steady to 3 cents higher
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