August 28, 2020

Good Morning,

Corn market down 1 and soybean up 5 this morning as traders look to consolidate this week’s gains heading into the weekend. It has been a good week in the markets as we have traded higher 4 of the 5 days in corn and 5 of 5 in soybeans. Export sales of corn and soybeans to China and unknown destinations along with dry weather (not here!) have added premium to the markets short term.
While I don’t believe the markets are going to crash short term I would advise producers not to become too bullish as there is still a huge crop in the country even with lowered yields.
Below I have put together some scenarios showing what our stocks to use ratio could look like based on lower yields than currently projected. The USDA is currently using 181.8 bpa and Pro Farmer came out with a 177.5 bpa last week. As you can see either one of these results in a huge carryout. In order for us to get a stocks to use ratio below 10% (historically what we would need to see corn near $4/bu) we would need yield to drop below 165 bpa which is below last year’s yields.

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Have a Safe Day!

Garry Gard