The USDA shocked grain markets Friday with its newest outlook for the corn and soybeans crops that are getting ready to be harvested. The government agency is now projecting record-breaking yields for corn at 175.1 bushels per acre and soybeans at 48.9 bushels per acre.
If these projections come true this fall, the corn and soybean crops will be the largest in US history, adding to the global surplus of grain.
While record yields are a point of pride for the agricultural industry, the overwhelming supply is hurting prices. On Friday’s report, soybean prices dropped as much as 21 cents per bushel, and corn fell to the lowest level in almost seven years.
As of noon Friday, corn for delivery in December was worth $3.24 and November soybeans traded for $9.69.
OPEC Primes Pump for Cutbacks
Oil prices jumped over $44 per barrel this week after a statement by new Saudi oil minister, Khalid Al-Falih, suggested that the Saudis would attempt to boost prices at next month’s OPEC meeting.
While a supply cut from OPEC could raise prices, skeptics point out that many of the member states, especially Saudi Arabia, have been increasing production in recent months, adding to the world's overwhelming supplies of petroleum, gasoline, and diesel fuel.
If OPEC members can’t agree to scale back production, it appears that they will continue pumping at full-speed and could knock prices back below $40, taking gasoline and diesel fuel prices along for the ride.
OJ Prices Wild
Orange juice prices spurted to a four-year high recently at $1.95 per frozen pound and have gyrated wildly since. Prices exploded as the market feared an orange tree disease called citrus greening and a wild start to the Atlantic hurricane season could derail this year’s crop.
Since then, friendlier weather forecasts and signs of weaker consumer demand knocked the market back down, although prices were still lofty Friday near $1.82 per pound.
These higher prices were welcomed by Florida’s orange growers, who suffered through prices near $1.00 per pound in recent years. Longer-term, they are facing a dire threat from citrus greening that has already ravaged Florida’s groves and could lead to further losses in the coming years.
Opinions are solely the writers’. Walt & Alex Breitinger are commodity futures brokers with Paragon Investments in Silver Lake, KS. They can be reached at (800) 411-3888 or www.paragoninvestments.com. This is not a solicitation of any order to buy or sell any market.