The Corn harvest is just getting underway with approximately 9% of the US corn harvest complete. The condition of the crop is slightly better at this point compared to last year, with 74% of the crop rated good to excellent compared to 68% last year. Forecasted corn supply from the upcoming crop year is projected at a historical high with usage also historically high.
Despite this, crop year ending stocks are projected to be the highest in almost 30 years. The price of corn has declined from a high in the spring of $4.38/bushel to the current price of $3.37/bushel. Futures prices are showing prices strengthening somewhat throughout the upcoming crop year, rising to the $3.62/bushel in July 2017.
Soybean harvest has also just begun, with only 4% of the harvest completed. Like corn, the condition of the soybean crop is better than last year with 73% of the crop rated good to excellent, this is compared to 63% last year. A record production is forecast for the soybean crop. However, demand is also high with increased bean exports and crush for soybean meal and soybean oil. Soybean pricing has dropped as the current crop season has progressed. The price has dropped from a high in the spring of $11.78/bushel to the current price of $9.72/bushel. Futures soybean prices are rising gradually to $9.90/bushel in July, 2017.
As you may expect, soybean meal and soybean oil prices are influenced by bean prices, but price is also driven by other supply and demand fundamentals. This can have an effect on prices that trend differently that bean pricing. Soybean meal prices have steadily dropped as the soybean prices have dropped. Meal has dropped from $418/ton to the current price of $312/ton. Futures prices currently show meal to remain relatively flat. Soybean oil prices have shown a lot of volatility with prices moving in both directions. Oil prices had been dropping until late July and then took a steep rise in price, and have since begun to drop again. The Chicago Mercantile Exchange price of unrefined soybean oil has ranged from $.29/lb to $.35/lb this calendar year. Its current price is $.3283, and futures show the price gradually increasing to the high $.33s/lb this crop year.
Cane sugar and beet sugar have evolved to become two distinct markets due to non-GMO demand. Cane sugar historically had a $.02 premium to beet, but this has grown to a $.04-$.05 premium with tight cane supply relative to the high demand for non-GMO sugar. The suspension agreement with Mexico continues to be a major driver of pricing which allows the USDA to adjust the allowed sugar imports from Mexico every few months to reset to a 13.5% Stocks-To-Use ratio. However, this agreement is in the process of be renegotiated. Although there are adequate overall US sugar stocks, cane could potentially be short of covering non-GMO cane demand. Until this is resolved, the market will remain tight on cane and the premium will most likely persist.
