By John DePutter & Dave Milne – Oct. 24, 2019

The news:

“Kent Beadle with CHS Hedging said corn and soybean futures have been slow to react as the weather delivers blow after blow over much of the Midwest.”

Brownfield, Oct. 17, 2019

What it means:

If correct, then corn and soybean futures may have more upside ahead. But the difficulty with situations like this is knowing when or if the premium is fully in the market.

Admittedly, the U.S. corn and soybean crops have faced a bevy of challenges this year. Right off the start, planting was delayed by overly wet spring conditions that meant some crops didn’t get into the ground until late June or even early July. After that, parts of the Corn Belt turned too dry. And with crop development still lagging well behind normal, many areas got a killing freeze earlier this month. On top of that, wet and snowy weather has battered some regions, most notably the more northern production states of North Dakota, Minnesota and Wisconsin.

Corn futures have certainly moved higher from early September, but the market so far remains well below where it was in the spring and early summer amid all the angst about late planting. Soy futures have also moved higher and are actually back near the spring highs, but you have to remember also that this year’s U.S. crop is already expected down about 20% from a year earlier. In contrast, American corn production is only expected to fall about 4%.

December corn

November soybeans

Yes, some harvest losses are likely. But a true picture of final crop quality and how big those losses might be is not likely to emerge until the harvest progresses further, or is even finished. As of Sunday, less than one-third of the corn crop and less than half of the soybean crop was in the bin.

The USDA did some modest tightening of the 2019-20 U.S. soybean supply-demand sheet earlier this month, but so far has stubbornly held onto the idea of a relatively large corn crop, regardless of the weather and all the other obstacles the crop has faced this year.

Some traders and analysts may beg to differ, but at this point, the market still isn’t convinced there’s a disaster in the making for either corn or soybeans. As most old timers know, good crops seldom end up being as big as expected – just as poor-looking crops seldom end up being as bad as expected.

It’s an old axiom that markets seem to reflect as well.

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