Corn and soybean prices seeking support

While corn and soybean prices have declined sharply from their peaks, prices are still very high by any measure, says U of I's Darrel Good. The pace at which prices transition to lower levels will be determined by a number of factors, beginning with the USDA's October production forecasts.

Compiled by staff

Published: Oct 9, 2012

December 2012 corn futures declined by $1.44 (17 percent) from the high on August 10 to the recent low on September 28. Good says the contract has managed a recovery of about $0.40 so far this month. November 2012 soybean futures declined by $2.85 (16 percent) from the high on September 4 to the low on October 3 and have rebounded about $0.45 since then.

Prices over the past two months for corn and the past month for soybeans appear to be in the classic "short crop, long tail" pattern where prices peak early in a year of sharply lower production and then decline in the post-harvest period as the smaller supplies get rationed and production rebounds in the following year. "A change in the trend of lower prices will require an additional supply shock or evidence that supplies have not been sufficiently rationed," Good says.

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