Markets may begin to drift back downward as the final 25% of the 2016 harvest comes in.
Corn and soybean prices drifted downward in light trading early Wednesday, with record bumper harvests piling up more grain and uncertainty of whether the U.S. Federal Reserve would raise interest rates.
CBOT December corn slid more than 2 cents to close at $3.46 1/5, and November soybeans tumbled more than 7 cents, closing at $9.76 3/5.
“I think that farmers selling will continue to cap rallies,” says Joe Vaclavik, founder and president of Standard Grain. “The last 25% of the corn crop is being harvested. It’s going to compete for storage in many areas. There just isn’t a place for these bushels to go."
More corn will end up stored in bags and on the ground as storage space tightens, he notes.
Meantime, Intl FC Stone raised its 2016 U.S. corn and soybean yield estimates. Corn yields increased to an average 175.3 bu. per acre, up from an October estimate of 175.2. And average soybean yields rose to 52.8 bu. per acre, up from 52.5, according to Allendale.
Despite strong corn exports, the large supply could keep the market range-bound, according to Vaclavik.
“We’re getting close to the upward end of this range, somewhere in the upper $3.50s [or] maybe the low $3.60s,” he says. “I think you’ve got an outside shot at the low $3.70s or $3.80s, but beyond that, it’s going to be very, very difficult to rally this market.”