Continued flooding, especially in Iowa, has the market focusing on the size of the corn crop and traders taking prices to new all-time highs.
Once more, we talk about history being made before our eyes. The December corn contract on the Chicago Board of Trade has made eight consecutive all-time highs. This is beyond amazing.
While that is going on, the November soybeans are at all-time highs, and the wheat futures have turned around from their recent down-trend.
Before the open on Tuesday morning (June 17), the market is poised to see if this can continue, or if yesterday’s trading is a warning for a “Turnaround Tuesday.”
The highs June 16 were made early, then the market traded lower, and closed near the lows of the day. December corn, for example, posted a high of 7.91, up 26 cents from the Friday trading. At the close, however, the price was 7.65, unchanged. The low of the day was down 7 cents.
Similarly, the November bean futures had a 15.64 high, up 33 cents. The close was actually 15.23, down 8 cents for the day.
The July wheat futures were off more than a nickel for the day after a high of 9.10, up 28 cents from the Friday close.
These all would indicate a topping market, but you read that every week in this space and it hasn’t been true yet. It will, eventually, as my “Blind Hog” market sense kicks in any day now.
Looking back a little, December corn futures gained nearly $2 since the end of May. The December is up $2.70 since the end of March. November soybeans are up from $10.60 the first of April to 11.55 June 16.
July wheat, which lost $5.41 from the middle of March to the end of May, has bounced $3.69 since then. These are huge moves.
What does the current market mean? The plain fact is, we don’t know how reduced the size of the corn and bean crops are by the extreme weather.
After the flooding is gone, the “rains made grain” where the grain is not damaged. Crops in northeastern Ohio are improving rapidly, and this is not the only place.
The market can be assumed to be over-reacting right now, but that was true a week ago and the damage actually got a lot worse.
The job of the market is to guess the value of the crops. In doing that, there are a lot of jerks in prices and exaggerated moves. So far, this move is not exaggerated until we know what the crop is.
Meanwhile, we watch the TV pictures of the water up to the pulpit in churches in Iowa and wonder how high the flood prices will be.