Corn prices: Don’t call it comeback

For the second week in a row corn prices were positive on the week, leading some to speculate that the lows may be in.

On Aug. 26, September corn futures hit a low of $3.605/bu. The high for the September contract this past week was $3.9125/bu. In that timespan the September contract went past first notice day, when the risk of delivery forces many of the long holders of September futures contracts to either offset their positions near the contract lows or roll to the next available contract in December at a wide carry, making neither option attractive.

The results of this process resembled a puke lower in price to start last week, followed by a rally once enough long holder’s capitulation had been digested.

With the September contract soon to expire, the new front month contract will be December, which currently sits near $4.07/bu., almost 50 cents off the September lows, giving the kind of cushion for some to suggest that the lows for the year may be in even with a bountiful harvest just around the corner.

Soybeans feeling the heat

Not to be outdone by corn, soybean futures were positive for the third week in a row as the end of August turned up the heat and lost the moisture with warm and dry conditions for a good chunk of U.S. production areas.

The conditions are lingering into September, with concerns that the top end of bean yields could be reduced. Along that same theme are similar conditions hitting the northern parts of Brazil, where the earliest planting of soybeans occurs in September. It is extremely early in the production process for South America, but when one weather market door closes, another one opens.