Futures prices have been steadily rising over the past couple of weeks due to crop condition concerns and positive exports. While exports are expected to stick around, Jack Scoville of the Price Futures Group said don’t expect the gains to continue.
“We had a pretty good run to the upside,” Scoville said. “Trade harvested the crop once (in the summer) and now they have to harvest it again when it’s actually harvested. The closer we get to harvest, the less weather will impact the crop. I’m starting to think we’ll start to roll over a little bit.”
Cleanup continues for crops affected by the Aug. 10 derecho in Iowa and Illinois, and warm, dry weather has created drought conditions for many areas. These items will affect condition ratings, but the soybean exports seen in recent weeks give Scoville hopes for continued overseas demand.
He said soybean prices are good compared to the rest of the world, and the U.S. “is pretty much the only game in town,” which will help maintain demand.
Meanwhile, corn demand still hasn’t recovered from the COVID-19 impacts on gasoline purchases.
“I think we are still seeing that lack of demand,” Scoville said. “With COVID-19 reappearing in a lot of places, there’s a lot of ideas we aren’t through with that yet. That’s going to keep the market limited and it’s going to hurt. We need better ethanol demand, even though it has improved some.”
With hot and dry weather expected this week, and the Pro Farmer Tour showing “pretty decent yields,” Scoville said to expect some regression from those estimates. However, he still thinks there will need to be more for the prices to continue rallying.
“We do need better demand,” Scoville said. “It doesn’t matter how big your crop size is if nobody wants any of it. We need to get going on some better demand ideas and there will be strong competition from South America later on.”