Counting on someone else’s misfortune

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Drought-stricken corn
Drought-stricken corn.

If Pappy said it, it may be so.

Pappy always said that there were three kinds of people in this world, optimists, realists, and pessimists. He said that no pessimists farm, and very few realists do.

There was a point to his thinking, and it is confirmed in scripture, where we are told that the farmer should plant in hope. He was a little wrong, however.

I talk to farmers who are pessimists nearly every day. Pappy also said that nothing is ever any worse than a farmer says it is.

This reflects the nature of some people to look at the bad side of everything, even if you have to turn it over to do it. This may be closer to the truth.

Take today, July 18, for example. I made the statement that the crops in our area of extreme northeast Ohio were probably the best I had ever seen. In response I was told that the thunderstorms last night brought just a couple of tenths of an inch of rain, and that the crops were only great if we got great weather going forward.

Different perspectives

An optimist would have said that the crops looked great, and we were probably on the way to a great crop. The realist that I was talking to is still worried about the weather to come.

There is the rub. We are currently suffering through some awful prices simply because the traders in Chicago are “looking out their windows” (not really, because they are in Chicago) and seeing crops that are as good as the ones I see.

They don’t see the crops burning up in north central to western Ohio. They imagine that the whole Midwest is on schedule to put in record crops, and they are pricing grain with that in mind.

The farmer in us says there are a lot of places where crops are not great. The agronomist in us says that, in every record year there are places where the crops are suffering.

The pessimist in us says that we are doomed, because we are raising good crops for cheap prices, or because we are about to burn up and we don’t know it yet. The economist in me says that we are better off to raise great crops for poor prices than to raise poor crops for great prices.

Taking advantage

We get the chance to sell a big crop for good prices only when some other poor farmers get stuck with bad conditions while we don’t. This is not a situation you should bet the farm waiting for.

This week we have seen erratic prices on the board as on a given day we may trade good weather, or bad weather ahead, or simply trade a technical bounce because we have gotten so lousy cheap.

As I write this on the evening of July 18, corn was up a nickel today, beans were up a dime, and wheat was up a nickel. If you only looked at today, you would think something bullish was happening.

In fact, the beans were just struggling to stay off the recent bottom, which is more than a buck-and-a-half off the top of a month ago. December corn futures are nearly a dollar off the June 17 high, but at least they are 17 cents above the recent low, even if they are only $3.63 1/4.

The December wheat futures are at $4.53 1/4, but they were at $4.36 1/4 two weeks ago.

Off the bottom

So, we have bounced nicely off the bottom. We have proved once again that the market almost always overdoes itself. Yes, the lows on all three crops are likely in.

We have survived them and rebounded. Sadly, the rebound is not much. And, worse, the highs are almost certainly already in, a month ago, also. Now comes that sad time of year when we hope, but don’t admit, that we are willing to see the western Corn Belt burn up as long as our crops stay good.

Maybe we can get that rare, late rally based on crop problems somewhere else. Don’t be tempted to think this way, and don’t bet the farm on it.

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