After one of the driest Augusts on record in portions of the Midwest, prices closed the month on a multi-week rally.
The big boosts come from the soybean markets, which are seeing potential condition concerns and positive export news to close August, with multiple double-digit gains.
“I think you have to look to price some of that, given some of the risk we’ve got,” John Payne of Daniels Trading said.
While Missouri and southern Illinois remain relatively clear on the latest U.S. drought monitor, Iowa is nearly completely covered by at least moderate drought conditions. Northern Illinois is labeled abnormally dry on the Aug. 27 report.
“If you are sitting on (soybean) supply that hasn’t been harvested yet and you are uncertain, I think this is a great market,” Payne said. “This is the longest position we’ve had in beans probably going back six, seven years. You have to take a shot at some point.”
It may be unusual for September, but Payne said to expect weather to be the driving force for the market moving forward.
“It’s a weird weather market,” Payne said. “This is not the time of the year where we rally on a lack of rainfall, especially on corn. This is not typically the time of year it needs it. If you look at the temperature maps, in a normal year, there might even be panic of an early frost.”
With the rally, Payne suggested traders look at a $4 level for March 2021 corn contract for some initial sales.
However, despite the persistent price jumps and weather market, Payne said to exercise caution when it comes to this recent price spike.
“I hate to be constantly pushing sell on a rally, but I just don’t feel there’s a lot of upside,” Payne said. “With the Brazilian crop that’s going to come in the ground in both corn and beans and the RBOB price which hasn’t followed through, (it shows) demand for ethanol is going to be weaker and demand for corn then is weaker as well.”