I plan to go long on corn and possibly short on soybeans for my next trade, based on the situation a week from today. The USDA report that was released last Thursday stated that corn and wheat harvests are down, so prices have been up. In fact, prices were nearly limit up for corn on the day the report was released, validating that speculators are pessimistic about the supply of corn. Soybeans on the other hand have been more unpredictable. Although the price went up on the day of the report (possibly due to lower dollar), they have been trending downwards since then, because the USDA report was encouraging about the global supply of soybeans. Not only are the stocks in the northern hemisphere expected to be higher than what was predicted last month, but South American harvests are also predicted to be a record high this year (1). While there has been a drought in the U.S. this year, Brazil is said to overtake U.S. as the world’s largest exporter of soybeans as their climate has been conducive for the crop’s maturity. That said, since at this time South American harvests have not started coming in, the prices are expected to remain high for the time being (1).
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