Q: As farmers manage sell-versus-store decisions this fall, which of the two commodities, corn or soybeans, has the greater price potential postharvest? 

Kevin McNew, Chief Economist, Farmer's Business Network, Inc.
kmcnew@farmersbusinessnetwork.com

Corn and soybeans both have decent upside potential through December based on shorter U.S. crops and robust demand. But corn has the best lasting strength, with upside potential into 2021. Record-large Chinese purchases, and crop problems in Northern Hemisphere production should open the door for solid exports. I also see a big price boon for U.S. corn thanks to a weaker U.S. dollar, which should help keep U.S. corn prices supported. Finally, as attention turns to the Southern Hemisphere growing season, odds favor a La Niña weather event forming this fall. This puts Argentina’s corn crop at risk as lower yields are much more likely during the La Niña weather phase.   

For soybeans, while I am short-term bullish, I’m not as optimistic prices will carry higher into spring as Brazil will likely see an increase in plantings. Farmers there have huge price incentives to grow soybeans thanks to a weak Brazilian real, and we’re likely to see another big step up in their production.

Ted Seifried, Chief Market Strategist, Zaner Ag Hedge
tseifried@zaner.com

Two months ago, my answer was confidently soybeans. With only 83.8 million acres of soybeans it seemed we could run ourselves into a tight domestic balance sheet with anything short of a record national average yield, if China started to buy. We have seen hints of both, and soybeans have rallied over $1 since the end of June. Corn has struggled, managing a shaky 35¢ rally in the same time frame. With 92 million acres and softening demand, the corn balance sheet offers little excitement.

Soybeans have a clearer path to higher prices. With production estimates coming down from a dry August and China buying large amounts, there could be a tightening of the domestic soybean balance sheet. USDA’s August projection of 610 million bushel ending stocks could be closer to 315 million bushels. This would be the tightest ending stocks since 2016/17 and one of the tightest stocks-to-usage ratios on record. If ending stocks projections drop further, some price rationing might need to occur. 

Corn is the sleeper. The big shock to the market would be if china’s corn buying exceeds expectations. I would recommend storing more soybeans than corn, but this could be a good year to be looking at re-ownership for both crops.