AFBF: Crop report bearish for corn, neutral for soybeans
The U.S. Department of Agriculture is forecasting a record U.S. soybean crop and the second-largest corn crop ever. But thanks to tight global soybean supplies, soybean prices should be under less pressure than corn prices where the huge crop is giving a bearish tone to the market, according to Terry Francl, senior economist with the American Farm Bureau Federation.
USDA Aug. 12 released its first forecast of the fall harvest based on field surveys, which makes it particularly significant for the market as producers begin to set their sights on harvesting and selling their crops, Francl said.
"The overall tenor of the report was bearish for corn and wheat and neutral to slightly supporting to the soybean market," Francl said. "With regard to corn, the old adage 'that big crops tend to get bigger' is likely to prevail in the market, unless some unforeseen weather problems develop."
After a difficult spring planting season, growing conditions turned to anywhere from good to excellent.
"The most likely weather issue that might occur would be a freeze that could reduce yield prospects, given the late development of the corn and soybean crops," Francl said. "However, it is at least a month, if not six weeks before that might become a probability."
Because of the huge corn crop, Francl thinks corn prices will remain under pressure going into harvest. But a tight supply and demand balance for soybeans will provide some support to soybean prices, particularly for the next six months, before the South American crop is harvested and ready for export.
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