Decent U.S. Crop Production Puts Pressure on Corn, Soybeans

An Agrinews report noted an increased supply of corn and soybeans due to better crop production in 2023 by U.S. farmers. This could potentially put an even heavier lid on rising corn and soybean prices as 2024 is underway.

“We had 95 million acres planted with a 175-bushel yield number that resulted in 15 billion bushels of corn,” said Joe Janzen, assistant professor in the College of Agricultural, Consumer and Environmental Sciences at the University of Illinois, in the Agrinews report.

“The yield was below trend, but we’ve been in a below-trend yield situation for the last five years,” he added.

Because of harsh weather conditions in other parts of the globe, other countries leaned more heavily on the U.S. to appease their demand for corn and soybeans. That trend could continue in 2024 if the same weather patterns persist.

“For the rest of the year, most of the action will tend to come from the U.S. export number,” Janzen noted. “A year ago, we had really disappointing corn exports, but export numbers have rebounded in a significant way.”

The view of lower corn and soybeans prices overall in 2024 was shared in a Farm Progress report. However, as mentioned in the report, there could be more volatility for soybeans prices compared to corn prices. That could be a factor for short-term traders to consider if they want to make a play on price fluctuations.

Buy the Dip in Corn, Soybeans

While there are price pressures on corn and soybeans, this could provide long-term investors or even short-term traders with an opportunity to buy the dip. Teucrium has a pair of funds that offer both types of investors exposure to agricultural commodities via futures contracts.

For plays on corn, traders can consider the Teucrium Corn Fund (CORN). It tracks three futures contracts for corn traded on the Chicago Board of Trade. It includes 35% second-to-expire contracts, 30% third-to-expire contracts, and 35% December following the third to expire. The various contract exposures help the fund limit the negative effects of rolling contracts, especially during a market in contango.

For traders looking for opportunities in soybeans, consider the Teucrium Soybean Fund (SOYB). It can essentially provide similar exposure to what investors could obtain by trading in soybean futures contracts themselves. This offers short-term traders or longer-term buy-and-hold investors easy ingress regarding soybean price exposure.

For more news, information, and analysis, visit the Commodities Channel.