Markets unPACKed: This Time of Year in Grains

This Time of Year in Grains


After a quick break as the farming community started harvest this month, we return for a quick discussion on the current status of grains. Currently, we are witnessing a correction in global indices, with commodity prices closing lower as well. While the move in grains can be in sentiment to other markets, we started to see consolidation in prices last week. In this column, we want to quickly point out the reasons for those that have not kept up with fundamental news in agriculture.

Harvest Lows

This is the time of year we typically start to see prices consolidate into ‘harvest lows,’ which refer to the lowest price point that corn and soybean futures prices experience typically, and it just so happens to fall during harvest. The reason is simple, and it revolves around the supply and demand of the grain. The crop being harvested is coming into the market, thus a surplus of supply. We call this ‘new crop.’ Below, Figure 1 is a chart of the 2016 November soybean contract chart from May-November and Figure 2 is the same for the 2020 November soybean contract.

Figure 1 (courtesy of


Figure 2 (courtesy of


Last year, we saw a once-in-a-decade shift in price action where harvest lows never came. Instead, we saw a demand market outpace the increase in supply. The story was the increase of growing demand from China from the U.S. trade deal, to rebounded hog herds after African swine fever, and stockpiling corn during the pandemic. Tightening global stocks was also a major factor.

This year, as our last article published on September 2 stated, we are looking more toward years like 2011, and lackluster demand markets are hitting the tape. This is reason to look for the typical harvest low again…and we are certainly starting to see that consolidation.

Demand Markets

Market commentators have been raising awareness of the lack of Chinese buying for a month now. The domestic harvest of corn in China is looking good after a record crop was planted, yet the USDA has not lowered export expectations of corn to China, set at 26 million tonnes (October 2021 – September 2022). Chinese purchases of U.S. soybeans have been lackluster and small, under 200,000 tonnes at a time. Chinese soybean purchases are down 35 percent to last year, currently. It is critical to keep an eye on demand as the U.S.’s big export window is post-harvest. Also concerning to our demand ability are the prolonged delays in the Gulf after Hurricane Ida damage, with many grain facilities still without power or facing larger infrastructure issues than anticipated, which are likely to extend into October.

While harvest is just starting and is a more fairly quiet time in the news, with everyone focused on harvest, we will report back some more technical analysis on harvest lows for our next article.


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