Forget the fat lady singing. It’s the fat farmer you have to be watching. (They are not all as lean as Dean Miller and John Wallbrown.)
This year, all the yield guessing and market watching comes down to what happens when the fat farmer runs his combine. Either he is surprised for the good or surprised for the bad or he is satisfied he was right all along.
Well, “satisfied” might be an exaggeration. It kind of goes against type. Pappy always told me, nothing was ever any worse than a farmer said it was!
I say this as an observer who has been trying to pick the top of the corn market for a long time. Every time I look at the chart and tell you we just saw the top, we dip a little and come back.
Monday we broke through the phony high made two weeks ago when the wheat futures were limit up overnight. At that time, I said that the corn only made the December futures high at 4.38-3/4 because it was pulled up when the wheat was locked limit up. I said it was a spike that would show on the chart for a long time.
Well, Monday we broke to a new high, at least for more than a year, of 4.45-1/4. We traded above the spike on three different days. The overnight close going into Tuesday trading is at the last high.
So, what is happening? It has to be that the market is still uneasy about the crop size.
The southern states are harvesting, and many places have record yields. Mixed in with them are scattered reports of results sharply lower than last year. No trend is in sight.
Get the farmers moving in Iowa and Illinois and we will start to have some confidence in the outcome.
You have to love the mood changes in the markets. Early this season, all the talk was that the record early planting would result in a record crop. Now, with harvest at hand, I read a report this morning that the early harvest was because of leached nitrogen in all the rains.
My opinion is that the early harvest is because this year, when we planted early, we also got warm weather in May. The corn grew all month, and the early planting meant something. The growth in May was a result of heat units, and the total heat units determine harvest date.
So, it seems we are making highs just before harvest and positioning ourselves to have a bust in prices. Make that a Pamela Anderson bust in prices — phony and inflated with anticipation, smaller than expected when all the market news implants are taken back out.
Looking at prices, the December corn futures demonstrated pre-harvest volatility with a high of 4.37-1/2 on the 19th, then a low of 4.15-1/4 on Aug. 24, followed by a high Monday at 4.45-1/4. Down 22, up 30 in a short time.
While that was going on, the beans finally put in a dip after a long uptrend.
The November futures high was at 10.49 on Aug. 5. Since then, we have seen a low of 10.11-1/2, a high of 10.48-1/2, a low of 9.93-3/4,a high of 10.34 on Monday, and are now trading at 10.13-1/4. A lot a volatility without a new high, like we had in corn.
The wheat, after the big break, has been sideways, with significant range some days. We broke from 8.68 December futures the overnight of the 6th, to 6.88-3/4 on the 18th. Last night we finished at 7.02-1/2.