Play Turner’s Take Podcast Episode 243

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The August WASDE increased corn yields to 181.8 bpa and soybeans to 53.3 bpa.  Corn was close to the estimates but soybeans were a bearish beat.  Corn ended up 3 cents higher and soybeans were 10 cents higher.  We see Dec corn trading between $3.00 and $3.35 and Nov soybeans between $8.40 and $9.00.  In our podcast today we go over the reasoning for these price ranges in detail.

Aug WASDE Raises Yields

Corn was up 3 cents today even though the report was slightly bearish.  A 2.7 billion ending stock suggests Dec Corn eventually trades $3.00.  We expect corn to chop around as market tries to determine the extent of the damage in IA and to see if there is additional Chinese corn buying.  Estimates are IA loses a net 50mm to 150mm bushels and I doubt China buys a whole lot of corn ahead of their own harvest.  Bulls can make the case ending stocks are eventually 2.5 billion but the bears will argue “big crops get bigger”.  Odds are the next couple of WASDE reports still have ending stocks in the 2.6 to 2.7 billion range.

Traders should note corn rarely puts in a seasonal low in the second week of August.  We see corn drifting lower in the last two weeks of August.  Sept Corn could trade $3 by First Notice Day. We think Dec Corn likely bottoms out around the Sept WASDE around speculation and confirmation of another increase to corn yield.  I like buying Dec corn in mid September as long as yields are only a bushel or two higher than the report today.

Until then corn will struggle to break out above $3.30 and then $3.35 without confirmation of widespread crop damage in IA or new Chinese corn buying.

Soybeans most likely trade in range with $8.90 and $9 being strong resistance levels.  If current weather forecasts are correct the soybean crop will get bigger, ending stocks could swell to 700mm bushels, and a harvest low could be $8.20 to $8.40.  Rallies to $8.90/$9.00 should be sold.

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Corn Supply & Demand Scenarios

Soybean Supply & Demand Scenarios

 

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Craig Turner – Commodity Futures Broker

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