Early soybean, corn harvest blunts market rally

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corn harvest
Corn harvest 2018.

The warning in this space last week was that harvest was coming, and the rally would likely be blunted. “Blunted” was an inadequate word for market action Sept. 21.

December corn futures were down almost a dime; November soybeans crashed 18 cents. December Chicago wheat futures burped up almost 19 cents of the gains made recently, in one day.

Hedge pressure

The major grain markets, which have posted unexpected and major contra-seasonal gains recently, took a breather Sept. 21, with minor follow-through early Sept. 22. Blame the breather on profit-taking by specs who had been long recently. Blame it on harvest hedge pressure from early corn and especially soybean harvest.

Hedge pressure is what happens when elevators take in grain and offset purchases by selling futures. In the rally, December corn futures went from $3.20 Aug. 12 to $3.791⁄4 Sept. 21. On Sept. 22, we were most of a dime below that high, at $3.693⁄4, unchanged for the day. Earlier we were as low as $3.653⁄4, so we may be bouncing back.

November soybean futures gained $1.311⁄2 to the high of $10.463⁄4 Sept. 18. On Sept. 22, we were at $10.261⁄2, up 4 cents. We were as low as $10.131⁄2 this session, so we are bouncing off the low if we are lucky.

Harvest has started in much of the Midwest, and will get rolling in earnest this week in some areas that were just started over the weekend. Early reports were of yields a little less than anticipated in corn and beans in the best areas of the region.

Bad in Iowa

In Iowa, our No. 1 corn state, the results are bad enough to eventually become legendary. Farmers who have lived through the drought and the wind storm are saying the yields are in the 60s. Sixty bpa would be a quarter of a crop.

There are people who have something to harvest, especially in Western Iowa. Some had yields zeroed by the crop adjusters. Those people had to go out and destroy what existed of a crop. The only good news to be heard in these disaster areas was that, in most cases, the farmers could run combines in both directions, but only at a maximum of two MPH. Thank God for small green apples.

Corn harvest in southern states has allowed U.S. Department of Agriculture crop progress statistics, out Sept. 21 to show 8% of our corn harvested, versus a normal 10%. Ohio has just started, with 1% done, against a 3% five-year average.

Both numbers will change this week, with good weather, and farmers anxious to finish early and bury the bitter memories of a late planting and late harvest last year.

The soybeans are 6% harvested in the country, exactly the five-year average. Ohio lags that, with 2% done, although 3% is the average. Northeast Ohio lags Ohio. I have seen just a couple of fields with more than 50% leaf drop on soybeans, and corn is starting to dry up, but is a long way off from harvest.

Right at normal

In other words, we are right at normal for a good year. Autumn is here. The sun set in the middle of U.S. Route 322 Sept. 20, marking our summer solstice. The Northern Spy apple tree that blocked my western office view loaded up with fruit, then fell over a few years ago. Consequently, I can see the transition strip between my lawn and my wood change colors.

The weeds are yellow, the shrubs are rust, and the soft woods are getting pale green to yellow. A few branches of the maples are turning red and orange.

A look at corn and soybean charts shows reasons why farmers should have been catching up the rest of old crop corn pricing and pricing a bunch of new crop beans. I know some who have most of their beans sold. It may be early, but those farmers may be right.

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Marlin Clark is an associate of Russell Consulting Group, with a local office in Williamsfield, Ohio. Comments are welcome at 440-363-1803.

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