It had to happen. It is that time of the year, and traders had to talk about dry weather.
Prices began to turn away from ugly drops the end of last week as dry weather concerns entered the Midwest. Farmers had been concerned for some time, but the traders treat May dryness as good for planting progress, hence good for yield and bad for prices.
Not so these days, as now the mood is that the rain we will get this week will not be enough and there will be increasing heat in the next six-to 10-day forecast.
It remains to be seen if this weather fear is correct, but it is easy to believe, even though we in Ashtabula County got a nice rain Sunday night. It was wonderful to see the fields looking dark brown instead of gray.
Put this week in your diary as the one that determines if we make a weather market run back up or continue the weekend downturn into new lows. Rain will be the reason.
Wheat has led markets higher on weather talk, although that has mostly been because of dry weather in the Black Sea area of Europe.
The dry weather in our Plains is a factor, but with the harvest starting in Kansas over the weekend, the deed is done there. It is a little late to lament the dry weather there.
On the weather fears, Chicago wheat added almost $1.30 to July futures in 10 days, finishing on the 21st. From there, we took a breather and dropped 42 cents to 6.80. In addition, the electronic trading now has July Chicago wheat futures down 9 cents before the morning session.
I am still a little confused just how to report the overnight and day sessions. The CME has gone to expanded trading hours, so there is now no pause in the morning while I am writing this. Trading is continuous from 6 p.m. Eastern time until 3 p.m. Eastern time.
At our 2:15, the trading day is considered closed and settlement prices are posted, but shortly after that the trade changes are posted as a different day. That is, at 2:15 we may see a settlement of up 5 cents for the day, but later the change will reflect the trading that continued.
After 6 p.m., the market quotes are strictly the new day. It can be confusing if you look at the screen in the afternoon, then after supper.
The new trading hours are a reflection of meeting a competitive situation. We still have open outcry trading, but the volume is in the electronic. Other markets are trading our grain around the world, so we have gone essentially to a 24-hour electronic trade, with three hours out for reconciling problems and reloading trading plans.
The markets seemed to turn around the end of the week because of the long weekend that resulted in some position evening, and because of rain forecasts. The result was some confusion about what direction we are actually headed.
July corn futures had the recent low back on the 11th at 5.72 1/4, then made a 6.44 1/2 high on the 21st. That is a 72-cent gain in 10 days. That quickly reversed, to a 5.73 1/4 low on May 25, Friday. However, a better Friday close and a fractionally higher trade this morning leaves us at 5.79 as this is written.
December corn is around 80 cents lower. The May 11th low broke 5.00, at 4.99. Hard to see corn prices start with a “four.” The bounce got us near 5.50, but Thursday we were back to 5.10 1/4. We closed higher after that, but are trading 5.18 here on Tuesday morning.
July soybeans have had a sharp decline, from 14.49 3/4 in the middle of May to the low on the 23rd of 13.51. Two days later, we were back to 13.82, up 6 cents for Friday. The electronic trading Tuesday morning has us up nearly 12 cents at 13.93 3/4.
November beans are trading up a dime at 12.99 1/4.