With planting season wrapping up across much of the Midwest, farmers are looking for the best value for their 2020 crop.
The USDA is expecting another big production year, which has led to lower commodity prices, but with a whole summer ahead, Jack Scoville of the Price Futures Group said there should be plenty of opportunities for producers.
“I think we can rally a bit from here,” Scoville said. “There’s some uncertainty going on in the world, especially regarding China, but that’s the bad news. Seasonally we do tend to go up this time of year. The funds are very short in the corn market.”
The uncertainties Scoville mentioned come from political tensions between the U.S. and China, and traders are worried it could cause a rift in the phase one trade agreement. However, he said there is enough indication that China is going to honor the arrangement, so he doesn’t expect the worst.
“The fact that China is showing signs of sticking with the agreement, despite the rhetoric out of Washington, is positive,” he said.
Scoville said producers need to stick to their guns and reward any rallies they see with some sales.
“They can afford to wait a little bit, but I think you have to use those rallies to lock in a price,” he said. “There’s still going to be a lot of soybeans and there’s still going to be a lot of corn. Any 20 cent rally needs to be rewarded.”
He said soybeans appear to have a little more price upside right now, but with the combination of U.S. and South American soybeans, there shouldn’t be any lack of supply anytime soon.
“If and when China ramps up its buying, producers are going to have to reward their buying with some sales,” he said.