Aug. 31 (CNS Canada) – Traders in corn and soybean futures might well have been hoping for a repeat of history at the start of the August 31 session.
This day last year, corn prices scraped bottom and then rallied, moving from harvest lows.
If they were hoping, they got it.
Today, a similar rally dominated Chicago Board of Trade corn and soybean markets with the top mover in corn rising 12.75 cents U.S. to US$3.4275 per bushel for September.
In soybeans, the September contract, the top gainer, rose 13.25 cents U.S., to US$9.3625 per bushel. The more heavily traded November contract gained 12 cents U.S. to US$9.4525 per bushel.
“Our harvest low was a year ago today,” said Steven Georgy, president of Allendale Inc., a market analysis firm. “So a lot of guys still have that optimism that that’s what we’re going to get today,” he said about three hours before markets closed.
The corn rally was the first it has seen on a long while, and according to Georgy, it was long overdue.
He said there are 2.3 billion bushels of corn carryout contracted at commercial operators and deliveries can no longer be put off.
That “wall of corn” now has to come to market with the month end and should help and buoy prices for the next week or two as the industry shifts its attention to new crop.
“We feel that corn is undervalued at these levels. It’s kind of like taking a balloon or ball and you’re pushing it under water, that when you let go of the ball, it comes right back up,” he said. “It comes up to where it ought to be.”
He added that after Aug. 31, the focus shifts to new crop and that means the key factors will be quality and yield of the corn and soybeans now out in fields.
Georgy said soybeans developed nicely through August thanks to timely rainfall during the pivotal mid-to-late August development period.
The central influencing factor now for both soybeans and corn is weather.
“There is still the fear that if we do have frost or if we get this cold weather moving downward into any major growing region, it will nip this crop and it will also lower overall average yields,” he said.
As well, Georgy added that he expects to see acreage adjustments, possibly in the United States Department of Agriculture’s next supply and demand report Sept. 12.
Corn acreage could be cut by as much as one million acres from earlier estimates, he said.
“There needs to be some adjustment. It’s when does the USDA recognize this?” he said.
He added soybean acres may also be adjusted, but they may end up being higher because spring replanting has cast uncertainty into the numbers.