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Soybean and Corn Overproduction Still Affected the Low Price

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(Credit: Daniel Acker/Bloomberg via Getty Images ) Soybeans are harvested with a Case IH 7230 combine harvester in Princeton, Illinois, U.S., on Thursday, Sept. 24, 2015. Soybean futures for November delivery fell 0.9% on the Chicago Board of Trade after reaching $8.92, highest for most-active contract since Sept. 16.Soybeans Fall From One-Week High
January 11
1:09 AM 2016

Soybean, wheat and corn trade still face the slow trading session in early 2016. Last year overproduction still affecting the price and shipment in futures trading. While according to USDA prediction, this year's yield will also recorded as one of the highest.

Farmers may have been indicated to withhold the crops, as Commodity Futures Trading Commission data shows a combined net-short position of 337,678 futures and options in corn, soybeans and wheat as of January 5. Bloomberg reported the position was 19 percent higher than previous week and twice much higher than a month ago.

Soybean, wheat and corn posted a third straight year of losses on the Chicago Board of Trade in 2015. Delivery of corn and soybeans by August 3 are down 17 percent as of reported on December 31, far less than USDA estimation of 6.6 percent annual decline. Meanwhile Brazilian and Argentina reported more profit from crop production.

Brazil export of corn recorded the highest in the four months, while following president Mauricio Macri decision to eliminate crop taxes and lifting currency controls have given more benefit to Argentina's export.

Farm Futures latest surveys predicted that soybean and corn production may still produce a big yields in 2016. Although the yield where slightly lower than last year, but it will add more supplies to crops inventory.

U.S. recorded the biggest stockpiles of corn, soybeans and wheat inventories in five years, according to a Bloomberg survey of analysts. Farmers are keeping their stock in storage bin, waiting for price to recover. According to owner of Schmitz Grain Inc, Douglas Schmitz, "It's the slowest sales pace in the 25 years I've been in the grain business." Schmitz, whose company is under contract to collect 2 million bushers from local farmers in Minnesota added, "It's amazing how well farmers were able to put away those bushels and wait for a recovery in prices that has failed to come."

Normally, according to Schmitz, half of the supply would be unloaded now, but until now there are still 80 percent of corn crop left and 70 percent of soybeans. As the outlook is not so bright, most of the inventory in Schmitz, whose storage based in Currie, Minnesota, has not been priced yet.

Meanwhile, Agricultural Week reported there is a slight rebound after corn and wheat futures posted fresh contract lows in nearly all months and soybeans hit more than six weeks low. Steve Georgy, vice president of Allendale Inc. said, "We're seeing some short covering now that, technically, support levels have held and we've got a major report that's coming out in less than a week."

The slow slate in corn, wheat and soybeans futures may continue to slow. Analysts predicted that demand from China is expected to rise after Lunar New Year holiday in February.

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