Now that Pro Farmer Midwest Crop Tour is over, and Pro Farmer has released their final estimates for the nation’s corn and soybean crops, what’s next? Analysts break down the potential market impact of the tour results in this week’s Markets Now.
“Based on the corn fundamentals, just look at U.S. carry [and] over global carry over, it's projected to be down significantly in 2018-2019, so that gives you a friendly outlook toward the corn market,” Brian Grete Pro Farmer editor and leader of the eastern leg of the tour explains. “You know, if you're talking about wanting prices to go above say, $4.50 in the futures, that’s probably not going to happen. It's going to take something pretty special for that to happen. But, the downside is also limited in my opinion, because of the supply situation.”
According to Jeff Wilson, Pro Farmer senior market analyst and leader of western leg of the tour, the key for the corn market will be the wheat market, which has extremely volatile over the past few weeks.
“The corn seems to want to follow wheat, but it gets stuck with the soybean drag down,” Wilson explains. “So, [even] if the wheat market is starting to get a little more friendly, the problem is [that] Russia is selling as much wheat as they can because they're afraid that the government [will] put some export taxes on or even export limitations.”
Wilson says there is still a lot of old crop corn in bins, and that farmer should keep their eyes peeled for basis opportunities.
“If we start to lose some of this corn say in that northwest part of Iowa, there's gonna be some basis plays out there,” he says.
Chip Flory, host of AgriTalk and AgriTalk After The Bell, agrees that wheat is the leading influence on the corn market right now. When it comes to the Pro Farmer yield estimates, he says anybody who expected the tour to produce a lower estimate hasn’t been paying attention.
“If anybody was surprised that we found good corn and soybean yield potential in the Midwest this year, you've been not paying attention,” he says. “These are good crops out here. We've known that for a long time”
Flory says soybeans have a supply side problem, but corn does not. However, he expects the tariff aid package to encourage farmers to sell soybeans straight from the field.
“What do you think [the aid package is] going to do to movement this fall? If you're going to have to have a scale ticket to go in and get your $1 or $1.65, or whatever it is, how quick are beans going to move this fall?” he questions.
Grete says the reality is that we’re looking at good crops, and while supplies are an issue, trade is the bigger problem.
“Trade is the bigger issue to me on the soybean side of things,” he says. “If you're talking about the bushels flowing and things like that, honestly, that's probably more of a cash market issue, basis, and that's where it's going to play out that isn't up to the futures market to decide.”
While it’s unclear what will happen, Wilson says it will be interesting to see if corn puts a market low in on August 31 again this year. Only time will tell.
“There is always [downside] risk but if we haven't got this crop size and the supply already factored into the market, what are we waiting for?” he questions. “Let's get it done, it should be done by now.”