Grain market rally looking good, but reasons still unclear

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Grain prices are booming on the Chicago Board of Trade, but it is hard to put a finger on just why this is so.

Delayed planting in some regions has sorted out, with the crops mostly in the ground. Political problems in the Southern Hemisphere are becoming clearer, although politics there is at best only clear as mud.

Weather concerns in the Midwest have turned to heat concerns, although we have been behind, and heat would be welcome, up to a point.

So, we digest what information we have and react to the markets instead of trying to anticipate them. Prices of our crops have made big moves up, and we mostly need to reward that move.

Looking better

Corn, which had lagged in the $3’s for so long, has made the move to the $4’s. Beans are not in the teens, but we have stopped wondering if we would drop into the 8’s and have instead broken futures prices above $11.

Now is the temptation looming to shoot for the moon. If this has happened, what else is possible this summer? Let’s rein in the bullish enthusiasm and look at where we have been.

First, the planting. Extreme northeast Ohio had made good progress, but even northeast Ohio in general had struggled to get planted. Northwest Ohio was sadly behind.

Now we are caught up, and the official statistics reflect this.

Making progress

According to U.S. Department of Agriculture, as of Sunday night, June 5, we have 96 percent of the Ohio corn crop planted. This was up from 84 in one week, and is now well above the 89 percent average.

This also puts us in line with the nation as a whole, which has 98 percent planted against a 97 average.

The bean case is similar, if a little later. I have locally seen some beans being finished, and that is reflected in the USDA stats. They show Ohio now 86 percent planted, up from just 63 percent a week ago.

That is well above the 77 percent average, however. The U.S. average is also 77 percent, and we are at 83 percent, up from 73 this time last week.

While this planting has been going on, marketing has been generally neglected. This week that was just as well.

Farmers going back to the quote pages were pleased with what they saw there. Generally we have just made new highs in all three major grains.

New highs

Friday or Monday we made highs, with some slight follow-through overnight into Tuesday, June 7. Now, on Tuesday morning, prices are lower, and we start thinking about Turnaround Tuesday, a trend that can’t been counted on, but can’t be ignored.

Every time we see higher prices, we worry about how long they last. This current trend has added big gains to a market that was not yet profitable for corn and was tempting for soybeans.

The old crop corn, reflected in July corn futures, made a high Monday at $4.271⁄2. Overnight we got to 4.28, but we are now, on Tuesday, trading down two cents at $4.251⁄4.

December futures got to $4.30 Monday, then $4.30-1⁄2 overnight, before slipping this morning to $4.281⁄2, down one-and-a-half.

July soybeans were a similar trade, only there the highs were on last Friday and they are higher this morning. July futures are currently at $11.44, up two-and-a-half cents.

The high was Saturday at $11.69, but with a close back at $11.32 on a range for the day of nearly 42 cents. November futures are currently $11.081⁄2, up two-and-a-half cents.

The high was Monday at $11.18-1⁄2, but we closed at $11.05-3⁄4 on a daily range of almost 21 cents.

Wheat prices

When we made the contract high for July Chicago wheat at $5.181⁄2 April 21, the spike on the chart looked so stark that we wondered if we could ever get back there.

We dropped to $4.543⁄4 on May 9. Surprise!

Our recent rally has gotten us back to $5.143⁄4 by yesterday. Today, we are trading below $5.05, however.

The bounce in wheat price was helped by late harvest worries. USDA puts us at two percent harvested, well below the normal ten percent. Rain has delayed the harvest in Texas and Oklahoma, even though our maturity this year is ahead of normal.

Better weather is forecast, so prices will ease in anticipation of the catch-up. Weather prospects in the Midwest are for warmer temperatures. The trade sees this as damaging, since they are programed to switch to crop problems, to talk up prices.

Most farmers see the crop as struggling and needing some heat units to get it going, so we will be glad to see temperatures that are warmer than normal, just not the three-digit temperatures we get in late July and August.

As for the politics, the Argentine situation may be stabilizing, and the Brazilian real (their currency) is at a high point. The currency is high enough to hurt their exports, which has us smiling as competitors.

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