| Corn, Soybean Price Rebound Appears to be Ending |
| Tuesday, 27 April 2010 18:29 | |||
 Urbana, Illinois, April 2010 — Prices for 2010 corn and soybean crops experienced weakness immediately following the March 31 USDA reports, but made substantial gains in the following two weeks. According to University of Illinois agricultural economist Darrel Good, that rebound appears to be ending.
December 2010 corn futures traded to $3.75 following the Grain Stocks and Prospective Plantings reports, but traded to a high of $3.95 last week. November 2010 soybean futures traded to a low of about $9.08 following those reports, but were $.60 higher late last week. Prices turned lower at the start of this week. “While much of the day-to-day chatter in these markets centers on the so-called outside markets, including energy, currencies, and financials, the most important price factor now is prospective crop size,” Good said. According to Good, some market analysts believe the current volcanic activity in Iceland could lead to favorably cool summer weather in some parts of the northern hemisphere. However, that volcanic activity is much smaller than historic episodes that have previously influenced summer weather. The timing and magnitude of the weakening of the current El Niño may have some influence on summer weather as well, but correlations are not strong. The relatively dry conditions in April could have some minor negative influence on corn yield potential. That impact, however, may be offset by the generous amount of precipitation from last fall through March 2010. Good said expectations for the 2010 soybean crop are not as well defined as those for corn. In general, an increase in corn acreage from intentions would lead to expectations of fewer soybean acres. In eight of the last 10 years, the difference between March intentions and actual soybean acreage was in the opposite direction of the difference in corn acreage. The exceptions were in 2008 when acreage of both crops exceeded intentions, and in 2001 when acreage of both crops was below intentions. “The magnitude of change in 2010 is difficult to anticipate since planting decisions will be influenced by decisions for a number of other crops,” Good said. “In addition, the magnitude of total planted acreage of all crops could deviate from March intentions. Soybean yields are most heavily influenced by July and August weather. At this juncture, there is no reason to expect the 2010 U.S. average yield to be below trend.” Good said if favorable planting and early growing season weather conditions persist, as forecast, corn and soybean prices could experience some ongoing weakness. More volatility would be expected as the crops approach the critical part of the growing season in July. SOURCE: University of Illinois Extension
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