Posted on May, 30, 2024 at 10:33 am
Heading into the summer months can sometimes create price volatility for grain prices. Concerns about crop emergence forces us to ask, “What will summer weather bring?” Will there be record yield for crops going in the fields? How will demand fare for U.S. crops both domestically and internationally?
This summer will likely be no different, with plenty of unanswered questions which will affect the markets and price gyrations. Here are three things to monitor during the month of June that could create dramatic price action for grain markets.
1. The June 12 USDA WASDE report
This report will offer an extreme amount of fresh data for the trade to dissect and interpret. Likely, it will be too soon to see any tweaks to acreage or yield. Traders will instead eye each demand category and ultimately how that could affect ending stocks estimates.
Trade will also be eager to see how or if the USDA adjusts the corn crop again in Brazil, this time due to recent flooding in Southern Brazil. Or will the Russian wheat crop be adjusted lower, in line with recent market chatter? Global ending stocks for all grains are important to note as well. Is the perception of ending stocks trending smaller, which could support prices? Or are ending stocks trending larger, which could weigh on price perception?
2. The June 28 Quarterly Stocks and Planted Acreage Report
With the slower spring planting, traders are eager to see if there were indeed shifts in acres. This could affect the longer-term balance sheet and price outlook for the remainder of 2024.
The current corn planted acreage estimate for the 2024-2025 growing season is 90 million acres with soybean acres coming in at 86.5 million acres. Recent slow planting conditions make planting 90 million acres of corn less likely. If there is not good corn planting progress in the next week, we may see some corn acres get switched to soybeans.
June 28 is a big report day, as the Quarterly Stocks report also comes out. This updated snapshot of demand for grains can sometimes be equally important in the eyes of traders — if not more important — than the acreage report. How quickly are we using existing supplies of U.S. grain and where is that grain located? Is it on farm? Or is it in the hand of commercial elevators?
3. The seasonal price tendency for both new crop corn and soybeans
The historical seasonal price pattern for corn and soybean futures suggests a final price peak for new crop prices in early to mid-June. Please also be aware, when the seasonal summer high occurs, it usually peaks mid-June. Then prices may slide lower until the harvest low in September.
In the coming weeks, continue to focus on cash sales. Make sure you have a good handle on the crop insurance you purchased this year. History would suggest the coming weeks will have substantial price volatility for grain futures. Which way prices trade largely depends on Mother Nature and the USDA.
Source: Successful Farming