Can Chicago corn and soybeans rebound from their January slump?

Chicago-traded corn and soybeans have begun February with a similar energy as last month, which featured the largest January price declines for the most-active contracts in several years.

Most-active CBOT soybeans Sv1 lost 19 cents per bushel on Thursday after last week’s U.S. soybean export sales unexpectedly came in at season lows. Soybean futures were down almost 6% last month, their biggest January loss in four years.

Corn fell nearly 5% last month, the most for January since 2015, which featured a similar fundamental situation for U.S. corn as this year. Most-active corn Cv1 slipped just 1 cent on Thursday but continues hovering near three-year lows.

The recent downward pressure in CBOT markets started last year as corn and soybeans notched sizable annual losses of 31% and 15%, respectively, coming after a string of winning years. Record U.S. and Brazilian corn crops coupled with Brazil’s massive year-ago soy output ultimately ended market bulls’ multiyear dominance.

Thursday’s poor export news for U.S. beans validates recent demand concerns from top buyer China, where the broader economy is still struggling to regain momentum post-COVID. This could continue pressuring nearby corn and particularly soybean futures, especially if South American weather holds up.

But new-crop futures will come under scrutiny this month, too, as the average price of November soybeans and December corn during February sets insurance guarantees to U.S. farmers for the 2024 growing season. These can impact planting decisions.

Versus the February 2023 averages, Thursday’s closes were 19% lower for corn and 14% lower for soybeans. November soybeans are trading at about 2.47 times the value of December corn, not distinctly in favor of either crop, but this inter-commodity dynamic can be just as important as the actual prices.

FEBRUARY POSSIBILITIES
The January price weakness does not have to continue in February for beans. Since 2010, most-active soybeans declined throughout January five other times aside from this year, and the contract notched gains in February all five times.

The trend for corn is more mixed with five other losing Januarys since 2009, though futures moved even lower in February in two of those years, 2009 and 2020. Global economic turmoil is the common link between those two years.

The U.S. government sees domestic corn ending stocks for 2023-24 up 59% on the year, and 2015 is the most similar year as stocks as of January 2015 were seen rising 52% on the year. U.S. soybean stocks are pegged up 6% in 2023-24, identical to the January 2014 expectations.

In January 2015, most-active corn futures were trading at the lowest levels for the time of year in five years, and today they are the lowest seasonally in four years. The old-new-crop futures curve is almost identical to 2015, with March trading nearly 32 cents per bushel under the December contract, suggesting relatively comfortable supplies in the immediate term.
The soybean market remains inverted as March futures are about 18 cents above new-crop November beans, but that premium faded a sharp 35 cents over the last month and now sits at the same level as 2015 and nothing like the strong, $2-plus inversion of early 2014.

Speculative positioning sets 2024 apart from 2014, 2015 and most other years, and it makes a potential argument for some price strength in February. Funds were heavy soybean bulls at this point in 2014 and modestly bearish in 2015, though they held a big net bean short as of last week.

Last week’s managed money corn net short was among the biggest of all time, whereas funds were ditching their net long at this point in 2015.
Source: Reuters (Reporting by Karen Braun, Editing by Matthew Lewis)