Since the first week of July Corn, Soybeans, and wheat futures prices have all significantly increased. December 2010 corn futures reached contract lows before rebounding $0.62 (or 18%) to close around $4.07 on Friday, July 16, 2010. Corn futures have not been this high since the beginning of March. November 2010 soybean futures gained about $0.85 (or 9.4%) to close around $9.85 on Friday, July 16, 2010. It was the end of April when soybean futures last closed at these levels. September 2010 CMEGroup wheat futures have gained about $1.07 (or 22.3%) to close around $5.87 on Friday, July 16, 2010. Seven months have passed since wheat futures last reached current levels.
For corn, the USDA crop progress report for the week ending July 12, 2010 indicates that 73% of the nation’s crop is rated good to excellent. This is up slightly from the previous week and about the same this time last year. For Kentucky, the USDA crop progress report indicates that 65% is rated good to excellent.
For soybeans, the USDA crop progress report for the week ending July 12, 2010 indicates that 65% of the nation’s crop is rated good to excellent. This is down slightly from the previous week and about the same as this time last year. For Kentucky, the USDA crop progress report indicates that 68% is rated good to excellent.
Even though we are in the middle of the growing season, and yields to this point are uncertain, price changes are not all supply driven. Since the end of the first week in June, the nominal U.S. broad dollar index, which measures the value of the U.S. dollar relative to major trading partners, has fallen over 3%. Commodity index funds for both corn and soybeans have been in a sideways position for the past few months. For corn, speculators are net long, meaning there are more longs or purchases than shorts or sales of futures contracts, indicating a slight sense of bullishness. For soybeans, speculators are net short, indicating some bearishness.
Prices will continue to be volatile given unknowns in U.S. yields (i.e., weather), global economy, and size of crops from competing nations. Price expectations should not be based upon speculation but upon profit expectations. For questions and comments please contact Cory Walters at firstname.lastname@example.org