Farmers might need to sell crops to get cash this fall, and prices soon could bounce.
Third-quarter U.S. volume of non-real estate farm loans jumped more than 30 percent from a year ago. It was the biggest third-quarter annual percentage increase since 2002, Nathan Kauffman, vice president of the Kansas City Federal Reserve Bank, reported Oct. 19.
Finances “may force these guys to sell a little quicker than they maybe wanted to do,” said Jack Scoville, market analyst at The Price Futures Group.
Farmers moved a lot of corn and soybeans pre-harvest and have been holding. If they have to sell sooner than planned, “you could see a bigger flush come around the end of the year,” said Scoville.
Corn and soybean futures probably are at their seasonal lows, and tax selling is likely after the first of the year — about when the market gets a good sense of Brazil’s corn and soybean crops.
Brazil’s farmers are trying to get soybeans planted to keep meeting demand, Scoville said. Early this week, Brazilian consultant AgRural reported planting 34 percent complete vs. the five-year average of 18 percent.
Still, Scoville said he’d wait for a price bounce to sell soybeans.
“But experiencing more than $9 or $8.90 might not be too realistic for right now,” he said of November futures. “We’re going to be sitting on some fairly huge supplies for the foreseeable future.”
Corn futures likely will stabilize, and December futures “could probably bounce around $3.60 to $3.65 to near $4,” Scoville said.
U.S. corn carryover could reach a record high, but ethanol and export demand look strong, said Dan O’Brien, Kansas State Extension economist.
Corn export reports each week “can provide us, coming out of harvest, some support for the market,” he said.