Current markets are all about the weather

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corn

We start talking about weather markets early in the year. Maybe we will have a wet spring, and prices will go up from late planting. Maybe we have a dry spring and prices go up after planting when the market starts worrying about getting the crop established in dry conditions.

The most common weather market comes in June and July when the market worries about dry and hot conditions hurting the crop. Most common is the good weather market. Crops are doing well, so prices go down as traders decide the supply will be larger than expected.

Variety

This year we have had a variety of weather markets in the same year. First, it was wet weather that delayed planting in some areas and had us thinking of the planting disaster that was the 2019 crop. Then the crop got planted, and prices declined as we expected big crops.

Two weeks ago, we saw some positive prices as long-term weather forecasts were published that said we would get too dry and too hot. Well, the news last week was actually that the hot weather did not materialize, and a lot of rain did cover much of the midwest.

The market is back to trading the weather market that can be best for farmers — great crops, smaller prices. As hard as it is to accept, it is best to have great crops even if poor prices come along with it.

Corn doing well

The corn crop is getting through pollination well. Although there are dry spots, most of the corn belt has had temperatures in the 80s and adequate rain. Corn needs an inch of rain during tasseling and two inches the week of pollination.

Ohio maturity was lagging, but the United States Department of Agriculture reported July 27 that we are now at 62% silked, 2% ahead of the five-year average. Even in extreme northeast Ohio, corn is mostly tasseled. While we have been tight on moisture a time or two in Ohio, timely rains have been normal. Most of us got a good rain July 27.

The result of that and perfect temperatures in the 80s is a crop condition rating for Ohio of 43% good, and 6% excellent. That is way behind a national crop that gained 3% in condition this week to a rating of 55% good and 17% excellent. Across the nation, the corn crop is ahead of normal maturity. Some farmers will harvest in August, and I am not talking about Tennessee.

Soybeans. So, the focus is now more on the soybeans, and 76% of the beans are blooming, 4% ahead of normal. The crop condition as rated by USDA has also improved 3% this week, to 57% good, 15% excellent.

Soybeans still have August for the critical growth month. And, the current forecasts for the first week of August (hard to believe we are almost there as this is written) is for hot and dry weather. Add to that significant exports, especially to China, and we have potential for price moves in the soybeans.

November soybean futures have been trading above $9 after being stuck below that psychologically-significant number. A $9.033⁄4 high was made July 24. The winter wheat harvest is now reported at 81% finished. The spring wheat crop harvest is just getting started. USDA reported this for the first time this week, at 1%.

Going into July 28, prices on all three major crops were off sharply. September corn futures were off three and a half cents at $3.211⁄2. The December were off three and three quarters, at $3.303⁄4. November soybeans were off almost 12 cents at $8.88. September wheat futures in Chicago are down one and three quarters at $5.26.

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