Be patient: Harvest progress is slow

The soybean harvest is dragging along and corn harvest is having trouble getting fired up. Meanwhile, there is no enthusiasm for the crop in the Chicago Board of Trade building on LaSalle Street in Chicago.

USDA last week pronounced larger crops than expected in corn and beans. I remain dubious, as I watch the Bellevue basis improve on poor yields.

Locally, there are still a lot of beans in the fields, but not a lot going to town at these historically high, but disappointing, prices. Spotty rains have limited harvest in some cases. The first killing frost, which normally pushes maturity along, did not occur until the last couple of days.

Still waiting

I have seen a little corn knocked down around Kinsman, but there is no real harvest started yet. This will be the week to open up fields and next week might be the first big harvest. Ohio, as a whole, is reported by USDA to be 37 percent harvested, up from 24 last week and close to the progress of 35 percent at this time last year. The five-year average is actually only 29 percent, so we can claim to be ahead of normal as a state.

Nationally, the harvest lags behind the normal 53 percent. Last year at this time we were at 58 percent, but this week USDA has the corn harvest at only 29 percent. It cannot be argued that this late harvest has affected the prices. The last three days have seen higher prices, but only as a dead cat bounce so far. (Even a dead cat can bounce a little.)

Until the last few days the markets had continued the horrible slide that has characterized trading since the financial meltdown in the equity markets. The last two days, as the Dow bounced higher, so did grain prices.

Uphill battle

I have thought that the worst of the grain price decline was from outside markets and that we would have a serious recovery once grain could trade on its own. This will be an uphill battle since we are in harvest and have little reason for demand to affect prices. Still, the slow corn harvest will limit any “gut slot” crush of harvest supply on prices, as the financial mess already supplied all the pressure we needed to make a harvest low.

The tug of war now is between users who want to book grain at the lower prices and producers who want to price nothing until something has to go to town or until the next bill needs to be paid.

Sadly, those who would have forward contracted a lot of grain at higher prices this summer were prevented from doing so by a cash market that was shut down in response to record margin calls. There was no cash bid most places. Some got coverage with options, at high premiums. Most are hoping for some kind of move, like we got this time last year, to move grain on.

Last year prices soared after the first of the year as the awesome nature of the growing ethanol business fired up demand. This year some of those plants are bankrupt from high corn prices and disappointing ethanol prices. The big side effect of lower crude, now less than half the price of two months ago, is cheap ethanol. The demand side of this market is an unknown, at least to me.

Prices

Looking at prices, December corn futures have lost over $2 in less than a month, to a recent low of $3.71 Oct. 16. This is also less than half the nearly $8 of the all-time high made this summer. We have, however, bounce the last few days to $4.18 1/2 Oct. 20, although we slipped to $4.11 overnight.

The soybeans have lost nearly $4 in five weeks, to an $8.25 low Oct. 16. A strong rebound had us to $9.34 Oct. 20, but we eased off the $9.15 overnight.