Early Midwest frost threat looms
In trading Sept. 1, December corn futures fell 29 cents to $7.38 ½ a bushel, down 3.7 percent on the week. Barring a sharp rally before the weekend, December corn will post its first weekly decline since the end of July.
November soybeans fell 23 cents to $14.34 ½ a bushel, up 0.8 percent so far this week.
Matt Connelly, a broker in the CME corn options pit, downplayed the potential for an early frost, though he noted colder temperatures could be a problem for soybeans, which aren’t as far along in development as corn.
Corn futures rallied most of August as it became clear the July heat wave curbed the crop’s production potential. Now, with lower yields already factored into the market, corn futures may have further downside over coming weeks, Connelly said.
Current futures prices indicate traders expect average U.S. corn yields of 147 to 149 bushels an acre, Connelly said. In a report last month, the USDA estimated nationwide yields at 153 bushels an acre.
“We need confirmation of a 145 to 146 (bushels an acre) yield before we have another leg up,” Connelly said. Sept. 1. “We’re running out of bullets. You’ve got to feed a bull.”
Still, analysts and traders will likely keep a wary eye on Midwest weather into the autumn. With U.S. corn stockpiles already on track to shrink to the lowest levels in 16 years in 2012, farmers can ill-afford any more weather difficulties.
“Corn losses are certain this year from the hot and dry weather seen in July and the poor spring weather that hurt planting,” Jack Scoville, an analyst with Price Futures Group, said in a Sept. 1 report.