Harvesting (and marketing) grain in hope

More than any other time in recent memory, farmers this year are harvesting in hope. That is, their collective marketing plan is to hope that prices get better. It remains to be seen if that hope is justified.

Talk to elevators and processors in our region and the talk is consistent. There was no move by the producers to do any pricing as this crop was developing. There was never a price that inspired sales, and yields did not make sales necessary. We all know how this works. The easiest grain to buy from a producer is the grain he knows will not fit in the bins.

In years of high yields, there is pressure to reward any upward movement in price with some small sales to guarantee a home for the surplus. Then, if a real rally develops, forward sales reward the market for purely reasons of price. In like manner, it is hard to buy the bushels from producers when prices are low and there is space in the bins.

That is where we are this year. Some years the need for cash flow dictates sales, but that has not been the case recently. Particularly in northeast Ohio, revenues to landowners from the shale oil patch have affected grain marketing decisions. In some cases, those effects are permanent ,as many farmers used gas checks to put up grain bins and buy semis.

This last year we are far enough away from the high-priced years that the need for cash flow is emerging again, but there is little sense that farmers are really hungry right now.

So, here we are with the crop mostly harvested, mostly in the bins at home, and mostly unprotected on price. The farmers are looking for a reason to sell, and right now that may be only a matter of work load and history. When January and February come, they move grain simply because that is when they are used to making time for it, and because the bankers want the operating loans turned over.

Getting major movement that is caused by price incentive does not seem likely right now. That is, eventually the grain will move, and there will be a reason for it. Right now we don’t see the reason yet.

Kickin’ back

If I had to find one word to describe harvest, it would be “unhurried.” Farmers are the most comfortable about progress now as in any time I can remember. We are historically early in northeast Ohio, even if that is because of drought stress and not because of normal maturity.

Fall tillage has been kept up behind the combines. Cover crops are planted, the remaining acres in some cases remain only because the farmers are willing to let corn stand to dry some more. Pity the elevator that needed drying income this year! Corn coming off at 17 percent moisture in the middle of October is something I never expected to see, but I did this year.

Percent harvested

Ohio farmers, as of Sunday night, are reported by USDA to have completed 76 percent of the corn harvest. That compares to 46 percent normally. Nationally, we are at 75 percent versus a normal 68. This reflects more of a normal crop and normal crop maturity in the main Corn Belt.

The soybean harvest is 93 percent complete in Ohio, where 67 percent is the norm. The U.S. is at 87 percent finished against an 80 percent average.

The down side

The harvest progress is the bright spot. The harvest prices are not. Recent highs in corn and beans were two and three weeks ago. It seems like once we got well into the crop, the traders got comfortable that the bushels predicted were actually there. Maybe they did once worry about the crop, but they have stopped.

December corn futures hit the recent high of 3.99 3/4 in early October. The contract then declined almost 28 cents in two weeks. We have bounced 11 cents, and were trading 3.83 1/4 early Tuesday as this was written. We are down a cent and a quarter for the day.

November soybean futures are being used to price beans for the last time this week. We will basis to the January contract. The bad news there is that an inverse has developed the last couple of days. This means that the market sees beans worth less now than a few days ago.

The January contract is a couple of cents cheaper than the November, when it normally is five to seven cents better. In recent years this has been only a couple of cents better, but it was better. November beans had the low on Sept. 11 at 8.53 1/4. We saw a rally to a high of 9.19 3/4 on the 14th, but now we are trading at 8.91. That is, however, up six for the day so far.

Wheat is in the process of drifting back to the middle of the recent range. December futures were 4.63 on the fourth of September, then rallied to 5.31 1/2 in a month. Since then we have slipped back to 5.07 1/2, down one and a half this morning.