Prices on the Chicago Board of Trade, June 7, started out strongly higher in the overnight session. At the “biscuit break” from 8:45 a.m. until 9:30 a.m. EST, we had July corn up 18 cents and July soybeans had been up as much as 44 cents.
It did not last. Prices drifted lower all day, and the July corn finished down 31⁄2 cents, while the soybeans finished up just six and a quarter.
There was plenty of reason for bullishness, so the break in prices was unexpected. The market is looking at dry weather in South America, which is hurting the “safrinha” corn crop, their double crop. This is supposedly the driest weather in 91 years, so it is more than just something to talk about.
At the same time South America is dry, the U.S. is very dry in the northwestern Corn Belt and the Pacific Northwest. The white wheat crop Washington is said to be gone, and the spring wheat in North Dakota, already limited in acres with completion from high-priced soybeans, is said to be bad enough to need replanting, except it is too late to plant.
Many local areas of the Corn Belt report dry weather, although some are expecting needed rains. So, the market was primed for continued rises in grain prices after we saw gains of 46 cents in December corn and 63 cents in November soybeans. In fact, we saw a July corn futures high of $7.061⁄4, but we closed at $6.791⁄4.
Last week’s gains represented a new rally after a huge break that saw us lose $1.38 in corn futures, for example. However, for whatever reason, the market took back the large gains, June 7.
On June 8, however, we were seeing big gains overnight. At 8 a.m., June 8, we had July corn at $7.01, up 181⁄4 cents. The high was $7.061⁄4 overnight, equaling the recent high, but nowhere near the $7.351⁄4 contract high of May 7.
December futures the morning of June 8 were at $6.161⁄4, up 25 cents. There the contract high was $6.38, May 7.
We saw November soybean futures at 14.80, June 7, a new contract high. That was up 441⁄2 cents at the high, but by the time the day session was over November beans closed up six and a quarter cents at $14.413⁄4.
The morning of June 8, we were trading $14.711⁄2, up 353⁄4 after that $14.80 high.
It seems that the dry weather is taking over the market thinking again. We are now in June, and this is the month we rally if conditions are right. The market highs are normally in June if we have weather markets.
It remains to be seen if we can make a new contract high in corn to go along with the June 7 high in soybeans.
The wheat markets are full of news. Going along with the upturn in the hard winter markets from late rain in the southern plains, we have the news that they have low protein expected.
Normally that would mean the millers would blend spring wheat from Minnesota and the Dakotas into the hard wheat, but the spring crop is a disaster. The acres are down strongly, as I said, and the dry weather is badly hurting the crop.
Meanwhile, the soft red wheat we grow east of the Mississippi is said to be having a great year. Big yields are expected, so the wheat crop size is a function of geography even more than normal.
Grain marketing in this volatile time is a matter of discipline. I am sure that many farmers watched corn prices zoom up in early May and used the excuse of being busy in the fields to ignore sales. There was a lot of top picking going on.
Then came the sudden huge break of $1.38. Now, we are getting a second chance. Do you sell on the way up, or bet for a new higher high? A couple of big rains in June will destroy the rally, but continued dry weather will give us a run at the all-time highs.
I remember selling corn one morning for $8.08 delivered to central Pennsylvania. It was not the top, but I will remember it forever. It would be a worse memory if the market had crashed.
STAY INFORMED. SIGN UP!
Up-to-date agriculture news in your inbox!