A rally that weather has not stopped

By MARLIN CLARK

Pappy had a saying. “Two fools met that day.”

I think of that this morning as I bid a farmer more than $7 for corn and he turns me down. Pappy would have said, “Two fools met!” this morning.

I, a fool for bidding $7 and the farmer a fool for turning it down. It is hard to know what to do these days.

The rains have not come generally, although some are comfortable, but scared.

Extreme northeast Ohio has had some rain, as has northwest Pennsylvania. The rally continues, although the big Monday gains have been eroded Monday night and Tuesday morning.

Now we are finding if the market runs out of steam before the farmers run out of fear. Fear is easy to understand. Everyone tells me the same thing — “I am waiting to see if I have a crop.”

The reality is that it will rain someday and most will have good crops, but we don’t know that.

History

We know that in 1988, our bellwether for these things, when it finally rained, the nation turned out 85 percent of the expected normal crop. Of course, it is also true that the crop that year was not as far along as this early planted one, and that it had already rained, on July 4, I believe.

So, it feels like this is new territory. Corn is tasseling and pollinating. Even in this late part of the Corn Belt, fields are shooting tassels.

We are told we need 2 inches of rain a week during this critical growth period, and we have not had two inches in a month. Surprisingly, most of the corn still looks good, although the areas that did not get any rain this week are deteriorating.

The temperatures are dropping this week, which helps. Corn still grows when it is 86. It fries when it is 100.

Soybeans

I am surprised how good the local soybeans look. With less water requirement, they seem to bee doing well on the cooler days. Again, that cannot last much longer.

Still, the market has been a corn market, not a bean market for this month. Looking at prices, September corn futures had the recent low June 15, at 5.09 1/2.

Since then it has been all drought talk, all the time. We have gained more than $2.25 to a high Monday of 7.35 1/ 4. We have been lower, however, since the market reopened at six last night.

Remember, we trade 21 hours a day now. As of a few minutes ago on Tuesday morning, September corn is down 13 1/4.

The December corn is very close to September in numbers now. The low was 5.06, and we are up 2.27 to 7.33 Monday, then down 13 cents a few minutes ago.

These are huge gains, and have some sensible farmers wondering if we are actually killing the corn markets. It is exciting to see these prices, although it is a mixed blessing. Better to have rain and $5 corn.

The high prices mean that livestock numbers will decline. They mean that the ethanol plants that closed this summer, waiting for cheaper new crop corn, might not reopen. They mean that some plants have announced holidays recently. They mean that demand goes out of the market, and that means lower prices.

The cure for high prices is high prices. Soybean futures are not so amazing, relatively. November soybeans have gained 2.83 1/2 since the June 1 low. That is much less as a percentage of price, although still a huge gain. This reflects a market that is comfortable with the acres and not worried yet about crop damage.

The beans are not yet reproducing, and they are perceived to have more drought tolerance. So, the calendar and the weather are now the big price factors. This rally is now one of the latest.

Cooler temperatures have taken some of the pressure off, but we need rain everywhere. I said last week that the prices peak of fear, not the actual damage. The damage is not done, but lower prices today get me thinking that fear is peaking, and so also might be prices.

It is easy for me to say, and hard to listen to if you are the producer with no corn ears yet. But, the truth is that you still must fight off fear and sell as much corn as nerve allows.

(Marlin Clark trades producer and elevator grain from an office near Andover, Ohio for Town and Country Co-op of Ashland, Ohio. Comments are welcome at 440-363-1803.)