As long as weather conditions remain dry, Karl Setzer of AgriVisor expects prices hold.
“Weather conditions over August have been hot and dry,” he said. “August is a huge month for crop production—more so on soybeans, but it can affect corn. We are on track to have of the driest Augusts since 1895.”
Looking at the short-term history, the weather loss has been greater on soybeans. In years that are comparable to 2020, Setzer said yield hasn’t exceeded 1.6 bushels over trend.
“If that would happen this year, we would see a soybean yield of 51.6 bushels per acre—USDA is counting on 53.3 bushels per acre,” he said. “We would be lower than where we are now, but still an above trend yield is very possible.”
Rains are in the forecast for parts of the northern Corn Belt Friday into Saturday, and the remnants of Hurricane Laura could hit southern Belt, leaving moisture in the central Belt uncertain.
“Precipitation totals are questionable,” said Setzer. “We might not see these huge volumes of rain and we really have to ask ourselves that with the damage we’ve had, will it correct it or will it prevent things from getting worse? We really got to focus on weather.”
Setzer said that the bottom line for soybeans is that soybeans were undervalued.
“We’ve seen the buyer surface,” he said. “The weather’s a catalyst. As long as everything holds, we should hold the strength unless we get too far extended to the upside.”
USDA is predicting an average cash price of $8.35/bu for new crop. If the situation holds, that could get increased a bit. But Setzer said producers need to look at the other side of the equation.
“Last year we produced a 47.4 bpa yield, so we would still come in above last year,” he said. “Are we going to be six bushels higher like USDA has been forecasting? Highly unlikely, but we have to remember we’re looking at an ending stocks estimate of 610 million bushels on new crop soybeans. That is with a 583 million bushel projected increase to demand.”
Setzer said USDA is projecting exports 475 million bushels higher to 2.1 billion bushels.
“If our soybeans continue to rally, it’s likely we will see that number chip that a little bit and probably drop,” he said.
Setzer talks about corn exports, crop condition ratings, and why we need to watch the value of the U.S. dollar as it relates to commodities in his full audio above.