Inside the Market

Where's the Harvest Pressure?

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(Meredith Bernard)

There is always a risk when writing about markets. By the time you read this, something may have drastically changed. From where I currently sit, corn and soybean prices just fell lower on the week, pressured by recent rains in the western Corn Belt and concerns about a closure of river traffic after Hurricane Ida knocked out power in Louisiana and damaged grain terminals along the Mississippi River.

December corn fell to $5.17 1/2 at the end of September's first week, near its lowest prices in more than a month. November soybeans fell to $12.86 1/2 a bushel, up a bit from its lowest prices in two months. Given the time of year and the usual tendency of those two prices to trade lower as we approach harvest, I have to say that both corn and soybean prices are holding up quite well.

Over the Labor Day holiday weekend, the U.S. Coast Guard announced the Lower Mississippi River had opened to all marine traffic, cutting short speculation that barge traffic would be snarled for several weeks or even months. Repairing damaged grain terminals will still take time, but the quick progress is impressive and eases concerns of possible disruptions to export activity during harvest.

On Sept. 10, USDA released new-crop estimates for U.S. corn and soybeans, adjusting planted acres and yields with the help of objective data from field plots for the first time this season. USDA's new corn crop estimate of 14.996 billion bushels (bb) was close to expectations, with a new yield of 176.3 bushels per acre -- eerily close to the 176.5 bushels per acre estimated by DTN's Digital Yield Tour in collaboration with Gro Intelligence in August.

For soybeans, USDA estimated a 4.374 bb crop, based on a national yield of 50.6 bushels per acre. That was also close to general market expectations but a little less than the 51.5 bushels per acre estimated by DTN's August tour. Estimates will be tweaked as harvest progresses this fall, but the potential for a surprise is rapidly narrowing.

Regarding prices, there may be a little more downward pressure on corn this fall, but I suspect the seasonal low for soybeans is in. I say that because even as USDA is estimating the third-largest U.S. soybean crop on record, prospects for demand in 2021-22 continue to look supportive, especially for soybeans.

November soybeans on the Dalian are trading at $19.33 a bushel, near their highest prices this year and unfazed by China's big summer purchases from Brazil. In early August, U.S. new-crop soybean export sales started to pick up and remain active.

Predicting just how much corn and soybeans China will buy is no easy task and will be the deciding factor for prices after harvest. The best I can tell from here, there will be more opportunities ahead to sell cash corn above $5.00 and cash soybeans above $13.00 in early 2022.


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