CHICAGO corn and soybean futures almost always undergo some kind of summer rally as US crop potential remains vulnerable to weather fluctuations, but traders this year have displayed little to no concern over supply scenarios.
Market momentum has been downward since US planting wrapped up in late May, and large speculators entered July with their most bearish-ever mid-year positions.
Heavy price pressure in July is not terribly unusual, especially when weather for US crops has been largely non threatening.
But comparable downturns in the past have come when investors were long, making this year’s action a bit more rare.
December corn futures have tumbled 19% since the start of 2024 and are down the same degree versus a year ago.
November soybeans are off 14% since the year’s start but are trading 21% lower than on the same date in 2023.
Given the lack of a concerning Corn Belt weather forecast and the relatively weak US demand as of late, new-crop corn and soybeans appear unlikely to return to their annual highs, both of which were set on Jan 2, the first trading day of 2024.
This would be the first time since 1975 that November soybeans marked their year-of-expiry high in the year’s first session, and it would be the first time since 2013 that December corn did the same.
December corn in 2013 opened the year at all-time highs for the date, though both new-crop corn and soybeans opened 2024 at three-year lows. Funds were already heavily short corn at the start of 2024 but had just flipped to bear territory in soybeans.
November soybeans would need to gain 16% from last Wednesday’s settlement to match the Jan 2 high of US$12.37 per bushel. That happened only twice from this point in the last two decades, 2010 and 2020, and both were associated with a significant downsizing in expected US ending stocks.
December corn needs to rise more than 23% to return to US$5.02-1/4, and such gains were also seen in 2010 and 2020 for the same reasons as soybeans. Corn also achieved this strength in 2006, which was related to a policy shift around corn-based ethanol.
The last two times December corn notched its yearly low in July were in 2003 and 2007.
November beans have not made July lows in the last two decades but did so twice in June, in 2010 and 2017. — Reuters
Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own.
