The term “weather market” usually has negative connotations, and we think of bad weather and higher prices.
Actually, the continued slide in grain prices that has marketing flummoxed is also a weather market, just of the good weather/bad price kind.
Locally, we fret about cool weather and late crops, but we have to admit that even here the conditions are improving. The corn has grown out of the “yellow streak” disease, and doesn’t even look so up and down. Maybe it looks better now because you can’t see as much from the roadside survey!
While most of the country is silking (USDA reports 78 percent as of Sunday night) and a significant amount is in dough (17 percent), we are not seeing very many acres that are tasseled. We are seeing good growth and color.
Now, for the first time, the market is using the “f” word, “frost.”
Monday night market letters mentioned that some northern areas were worried that the current cool conditions would leave them susceptible to frost. We really are determined to stir up a bad weather market when we talk about frost in July!
Prices have mostly continued lower the last week, although wheat shows signs of a bottom and the soybeans have had erratic trading that seems like indecision day-traders taking profits.
The September wheat futures have actually bounced 13 cents off the July 23 low of 5.20 1/4, and that is after being down one and a half cents this Tuesday morning.
Meanwhile, the soybean futures are following an alternate day theory — up one day, down the next. The recent soybean price pattern is weird, to say the least. On July 11, we had November futures at 10.65. On the 17th the high was 11.18 3/4. On the 23rd the price was 10.55. On the 24th it was 11.07 1/4. On July 25, it was back down to 10.70 1/4. On the 28th, which was the next day of trading (Monday) it was 11.10 again.
This morning, Tuesday, it has fallen back to 10.98, down nine and three quarters for the day. Try to make sense of that!
May corn futures, meanwhile, have hit the “pause” button for the sixth time since the downtrend took over in May. Over that time, we have dropped over $1.60 on the price of December corn futures.
At various times we have seen the downtrend paused, with an uptick for a day or three, then a return to the downtrend. Every time we see the pause, we hope for a change in trend. So far it has just been the short traders taking a breather.
It remains to be seen if this is another corn breather or not.
Currently September corn futures are down almost three cents, at 3.65. The low was last week at 3.56 1/2. The high was Monday at 3.69 1/4. So, we had a nearly 13-cent bounce off the new low, and are still trading close to the high on a day beans are down a dime.
Does this mean there is hope, or is this just the frost premium pause before the reality of a crop at the peak of condition comes back to the market.
USDA reported corn condition Monday at down 1 percent from the record level it has been at. With the maturity for the nation as a whole 3 percent ahead of average on silking and 1 percent ahead on dough state, I have to think the soft market continues. It will take an August frost scare to put the fear of the devil in this market.
Soybean maturity is even farther ahead. Uncle Sugar says the soybean were 76 percent blooming, which is 4 percent ahead of normal. 38 percent are setting pods, which is 7 percent ahead of normal. However, the soybean condition ratings declined 2 percent in the good and excellent categories.
Foreign news is mixed. Recent rains in Brazil are rebuilding moisture levels in anticipation of planting in September in the early areas. On the other hand, the same weather pattern brought cold weather and the risk of wheat to a flowering wheat crop.
China bought new crop soybeans, even as the state has been selling old crop beans at auction.