August is historically known to be a big month for the market. Not only are soybeans “made” during the month, but USDA also releases a bundle of reports that historically move the markets.
In its weekly Crop Progress report, USDA says 72% of the U.S. corn crop in the top 18 producing states is rated good to excellent, which is the same percentage as the week prior. As for soybeans, USDA says 73% of the crop is rated good to excellent, a point higher than the previous number.
“Crops look wonderful,” says Julie Edmunds, a farmer in Sperry, Iowa. “[They] look very, very good. We’re excited for what the yields are going to be this year.”
With statements like that, Brian Splitt, a technical analyst with AgMarket.net, has been asked a common question: “What should I do with my old crop?”
That question prompted him to do some digging to determine historical lows in August. He started in 2007 and pulled data through 2019. He then took out 2008 and 2010 through 2013.
“What I wanted to see is from the closing on the last day of July what type of move did we see to the close in August? [I also wanted to see] what type of move did we see from the July close to the August low?” Splitt says.
He found obvious patterns.
“Half of those years, the low for the month was made at the very end of August,” he explains. “That would suggest, predominately, we should expect or continue to see pressure for the next month as we go into the delivery cycle for the September contracts. At the very least, the earlier in the month we’ve made a monthly low during the month of August was on the August report.”
Remember, Splitt says, soybeans will only pack on so much yield and then stop growing. If demand continues to grow, he believes farmers could see good basis support for the crop and higher values.