Grain markets: Are we swimming into new crop?

The best thing I can say about the 3 inches of rain I have dumped out of the rain gauge over the last few days is that it did not come in October.

Much of the corn has been chopped, and the beans are not ready. We don’t need the rain, but it is not holding harvest up much. I would hate to be trying to plant wheat, however.

Still, this is the time of year when we worry if we are going to have 60s and sunshine or if rainy fall runs into snowy winter. I remember picking corn on an open tractor in 15-degree weather, and I shiver from the thought. I remember the 50 acres of beans we ran on frozen ground in February, and trading grain seems like an easy way to make a living.

This is the time of year when I starve out my truckers as we hunt for the last give-up bushels of corn. Farmers are tempted to leave them in the bin now that they did not sell them a dollar ago and they are not sure of the size of the new crop.

Traders know best

Trader talk this time of year is all about USDA projections and why the traders know better. The market trades the USDA numbers like they come from the Book of Revelation, but they talk out of the side of their mouths about why USDA is wrong.

Take your pick of suspect guesses by the government gurus.

The reality

The corn crop is not nearly 13 billion bushels. The summer was too cool for the corn to do that well. The usage next year is not going to be over 13 billion bushels to bail us out of the big crop. Uncle Sugar is expecting way too many corn bushels to go into ethanol when that industry is still running losses.

Soybeans are subject to some of the same scrutiny. The support in bean prices while the corn was dropping was due to the shortage of old crop beans, the traders argue. We were told in January that we would run out, and now in September we have not, but it has been close.

The high prices have rationed usage.

The bean processors that would not contract meal because they worried about having beans to crush are now smelling new crop. If it would stop raining, they would have it.

So, if it was the old crop shortage that supported prices, the argument is that the new crop will collapse as soon as we start filling up bins with the new crop beans. In fact, there is a near inversion in the soybean market that would confirm that thinking.

The highest-priced month is January, just a nickel over November. There is a penny carry to March instead of a normal 10 or 15 cents. July futures are essentially the same as November.

It is encouraging that corn has not gone to zero, though it made a run at it. We are actually 40 cents off the December futures low of 3.02 on Sept. 8.

Volatility

There has been a lot of volatility to confuse things. One day, we were up 4 cents and the next down 4 cents. The optimist says we are going higher, the pessimist says we are going lower, and the realist says the market did nothing for those two days.

I am reminded that Pappy always told me that there are three kinds of people in this world: pessimists, optimists, and realists. He says no pessimists should farm and very few realists do.

The realist in me says there is nothing new under the sun. Eventually, and soon, the crops will be off and we will be smarter, but not necessarily wiser. The corn crop will be smaller than expected, or larger, or the same.

The big crop keeps getting bigger statistically by the USDA method, but the corn is not corn until it is binned. Soon the talk will be about the high price of propane to dry all the corn, and farmers will be complaining about how cheap my price is for the bushels they have left over that they didn’t think they were going to have a couple of months ago. Then, the combines will get parked, and the hard work begins.

Growing it is always easier than selling it.