More market volatility expected

A market analyst expects more row crop price volatility.

Mike North with tells Brownfield the major shift in USDA’s soybean acres in the recent planted acreage report sent new crop prices skyrocketing towards fourteen dollars a bushel, but there was some correction. “Now interestingly enough, since that report, prices have fallen back with prices finishing Friday at $13.18, roughly.”

North says that big change in acres potentially cuts the 400-million bushel balance sheet the market thought they had to under 140 million bushels. “So, things are going to be very tight. From a stocks-to-use perspective, that takes it down to about 3.2%. That’s very price-supportive of soybeans as we go forward.”

North says this week’s USDA Supply and Demand Report is likely to lower yield estimates for both corn and soybeans, leading to more volatility in the market, but he says the fundamental outlook for corn is a bit different. “By adding the two-million acres, that does provide some offset to any yield losses we might get, and frankly, the USDA has not begun whittling down the demand side of the balance sheet to really reflect what most people, I think, have already accepted and that is demand is poor.”

North says the poor demand is most obvious in the export market, as Brazil’s record first corn crop is being followed by an expected record second crop, making Brazil very competitive. “If you look at the current balance sheet where we’re already struggling to export 1.7 billion bushels of corn, the current estimate at 2.1 becomes seemingly unattainable.”

USDA’s Supply and Demand Report comes out Wednesday, July 12th.

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