Corn and soybean markets have been playing like a finely tuned fiddle. Both markets are acting just like they are supposed to — which is scary. Whenever anything seems to be going almost perfectly you have to assume we might be overlooking something.
At the risk of sounding like a broken record, in my early August column I put my neck on the chopping block and predicted we would likely have a top in the corn and soybean market in September. I was a little off in corn — the market actually peaked in late August, but the top in soybeans occurred on Sept. 4. These will both likely be the highest prices for corn and soybeans we will see in the current marketing year.
So now what? After the initial selloff in corn and soybean prices, the market had found some reasonable support in early October. It is traditional and seasonal that after the harvest in the Midwest is wrapped up there is at least a slight improvement in corn and soybean prices going into year-end.
This year shouldn’t be any exception. Odds favor steady to slightly higher prices during that timeframe.
But be careful after the first of the year. High-priced corn is going to bring on a record planted acreage both in the U.S. and in the world. If yields get even close to normal trendline, 2013 is going to be one of the biggest bear markets in history in both corn and soybeans. These are markets to be aggressive sellers in on any strength.
The odds of maintaining corn above $7 and soybeans above $15 are slim to none and slim left town in early October!
Some people think markets aren’t logical. In the short-term they are not. But in the long-term the old wise rules-of-thumb still work.
Never store a short crop. Big bulls are followed by big bears. Short crops peak early and have a long tail. All of those apply to this year.