CORN bears are pointing to prices pulling back -30 cents in just the past couple of weeks despite bullish buying from the Chinese. There seems to be more and more talk inside the trade of the U.S. average yield working itself higher and perhaps pushing to a new record north of +180 bushels per acre. I’ve been on the opposite side of that argument, thinking conditions in parts of Illinois, Indiana, and Ohio along with some other areas to the South and West that have struggled a bit will keep a +180 record from being posted. Regardless of my opinion, as a spec, I’m long and wrong right now. At the same time, I still see the Chinese buying more U.S. corn as they have a problem with their domestic supply being out of position, limited supply to the south because of complications with flooding and coronavirus. The trade isn’t too focused on demand at the moment. The sexier story seems to be the possibility of a new U.S. yield record. I’m going to stay patient as both a spec and a producer. Me personally, I’m looking a lot longer-term and like the thought of having the corn in the bin better than selling at these levels. But each to their own…

SOYBEAN bulls continue to see good demand. The problem is U.S. weather forecasters show very little sign of major complication so there’s more talk of a higher average yield +50 bushels per acre. There’s really nothing fresh or new in the headlines. Bears believe Chinese demand will be somewhat limited between now and the U.S. election and that U.S. production estimates are going to creep higher. That makes the $9.00 level seem like the high end of the range and if relations turn more negative with the Chinese then perhaps the market retest the $8.50 level. Bulls think the Chinese buying could eventually be significant enough to pull prices higher, perhaps up to the $9.40 to $9.60 level. Bulls also like the weakening U.S. dollar and the fact it could attract more fund buying in the weeks ahead. Obviously, a record yield or even something north of +50 bushels per acre will work as a headwind and keep rallies limited during the next 30 to 45 days. As a producer, I still like kicking the old-crop beans into the stronger basis and waiting to price more new-crop supply.

WHEAT bulls are pointing to continued complications with about a quarter of Russia’s hard red spring wheat crop where there are still extremely dry areas. There’s also the continued talk of perhaps 25% of the Argentine crop at risk, but there are some rains in the forecast. I should also mention there are some new headlines about another major wave of locust starting to once again complicate production in Argentina and perhaps making their way into Brazil. Bulls are also pointing to what might soon be a multi-year low in the U.S. dollar. Bears point to the world’s top buyer of wheat, Egypt, once again only buying supply from Russia and Ukraine. There was also talk inside the trade that Brazil recently purchased a shipment of Russian wheat. As a producer, I like reducing some risk into the rallies. As a spec, I like the bull story and learned long ago to respect the fact wheat can run longer and higher than most think possible. But at the same time, in this new trading world, I’ve learned you have to have fresh headlines to keep the computer bulls well-fed. With this in mind, I worry that if the headlines become a bit stale at these elevations we could lose altitude fairly quickly. Bottom line, as a spec, I only want to play from the bullish side of the table but I have to constantly remind myself to keep my positions small because of the high frequency and computer-based trading models.

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