Play Turner’s Take Podcast Episode 184

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Another week and more planting delays.  The funds are still heavily short corn and soybeans.  We are well behind the pace for planting, and now we have concerns for acres and yield in both corn and beans.  Grain continue to have the potential to rally even as China prepares for a “New Long March” and a possible trade cold war with the US.  Make sure you take a listen to Turner’s Take Podcast

Corn Supply & Demand

Below are estimates for corn if we lose 3 to 6 million acres and 5 to 10 bpa.  That puts us at 90mm acres and a 171 yield and 87mm acres and a 166 yield.  I’m not saying this is where the market is going.  The purpose of these tables is to show everyone where prices could head IF we lose significant acres and yield.  Based on reports and conversations I have with farmers in IL, SD, OH, and IN, it does not sound good.  I think we could lose at least a billion bushels of corn.  Near term targets for corn is $4.10 in July and $4.30 in Dec.  If the market thinks we could lose 4 to 6 million acres and have a sub 170 yield, I think we hit those prices.

Soybeans Supply & Demand

Soybeans could be the next market on the move.  Planting soybeans in IL during June is not good for yields.  Farms that average 70 could go to 50 due to late planting.  I know a lot of people think soybean acres could go higher at the expense of corn acres, but the date is getting late and prevent plant might be a better option.  There was a story out of Bloomberg today that soybean farmers could get $2.00 per bushel and that send markets lower (thinking more farmers will plant soybeans to get the $2).  However, the USDA quickly came out and said farm aid will be structured to not influence planting decisions.  That probably means they will take the farmer’s historical soybean acres (previous 5 year avg?) and the county yields to get a soybean production number and pay $2 based on that.  That is my guess anyway.

I like soybeans. I think this is the next grain market that can jump higher based on lower acres and the yield drag.  If soybeans lose 1mm acres and 2.5 bpa, we are almost under 700 carryout.  If soybeans loses 2 or more acres and 4 to 5 bpa, then stocks are under 500 and close to a 10% stock to usage ratio. That implies soybeans trade in the mid $9s to low $10s.

It can be tough to hold flat price soybeans and options are expensive.  If you want to get long beans, then take a look at the Nov 19 vs Nov 20 soybean bull spread.

 

About Turner’s Take Podcast and Newsletter

If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes!

While the podcast does not have specific actionable trading recommendations, we do publish them in Turner’s Take Market Alert for spec traders and Turner’s Take Ag Marketing for hedgers. Want to know what to look for in the commodity futures markets? Take a listen to Turner’s Take podcast!

Craig Turner – Commodity Futures Broker

Turner’s Take Ag Marketing: https://www.turnerstakeag.