Play Turner’s Take Podcast Episode 238
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In this week’s podcast we talk about the spikes in coronavirus cases and how it can impact the US equity and commodity markets.  We then dive into the latest weather market for corn and soybeans.  We go over possible yield scenarios and probable price ranges.  Make sure you take a list to Turner’s Take Podcast!
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Corn
The updated weather models today called for cooler and wetter conditions in the Midwest later this week and into the weekend.  Next week is still hot and dry but the relief we see later this week will be beneficial for corn and soybeans.  Right now we think the market trading a trend line 178.5 bpa national yield with at least 30 cents of weather premium built in.
Our new crop corn supply and demand table is below.  We updated the acres to 92mm and had yield scenarios of 170, 175, 178.5, and 180.  We think 178.5 is the most likely scenario but we do like to see what happens to ending stocks based on a whole range of yield estimates.  As you can see below, corn yields need to be sub 170 for stocks to start getting tight.  This suggests Dec Corn will struggle at the 200 day moving average of $3.75.  There is no good reason for prices to get that high unless the market thinks corn is at risk of having ending stocks lower than 2.0 billion.
If the forecasts stay friendly to corn production then ending stocks could be estimated over 2.5 billion. That is still a lot of corn and the market makes it’s way to the low $3s during the harvest lows.  Dec Corn is trading in the $3.50s and you can make the case there is at least 30 cents of weather premium left in new crop corn futures.  If we have anything close to trend line yields then the corn futures spreads should widen too.  Dec 20/Dec21 and Sept20/March/21 should work lower.
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Corn Supply and Demand with Acreage and Yield Scenarios

 
Soybeans
Soybeans have a better bull story than corn.  If the weather is hot and dry in July and into August, we could see soybean yields come down.  At trend line soybean ending stocks are projected to be an adequate 400mm.  If soybeans has a 4% yield loss and the national average is 48 bpa, ending stocks could be sub 300, and soybeans could make a run at $10 during the heights of a summer rally.  Right now the market still thinks soybeans are close to trend line.
Soybeans also have a viable demand story.  China will still need to buy US soybeans this year and Phase 1 is still a demand driver.  I am holding off on any new soybean sales.  From a spec point of view I still like soybean oil and I like spreading soy over corn.
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