Grain markets hurt over long weekend

Traders fear long weekends for the surprises that can result in big reactions. This morning, June 21, as this is written, is a good example. Prices are sharply lower in early trading after the June 20 holiday for Juneteenth. Last week, corn prices were higher and soybean prices were lower. This morning, both are lower. 

Corn has lost the gains of last week, gapping to $7.101/2 on the July futures after a run at the contract high of $8.241/2 of April 29. On July 17 we touched $8, but we are currently at $7.101/2. July futures have lost 201/2 cents since the June 17 close. The July futures had gained 111/2 cents last week. 

July soybeans show a worse move. Soybeans made a new contract high of $17.41 on June 9. We were quickly lower, to $16.821/4 on June 15. A bounce got us to $17.241/2 June 17, but we have today gapped lower and are currently trading $16.811/4, down almost 20 cents. 

Weather

Last week, weather drove the markets, especially corn. June is the month we worry about weather for the corn crop, and there were problems surfacing. On a conference call June 20 I heard a report of temperatures in Missouri last week of as high as 109 degrees. 

Farther north in the Corn Belt, farmers were talking of temperatures in the 90s, but saw it mostly as helping a crop that was planted late and growing out of wet conditions, although some areas are dry. The market reaction for corn traders was mostly that the weather forecasts and the current weather conditions were too hot and too dry, and prices were helped as a result. 

The soybean prices did not go along, as the hot temperatures were helping with late planting which would increase the crop size. Hanging over the market last week was the rare three-quarter point raise in the interest rate by the Fed. In the long run, higher prices hurt commodities as analysts talk up fears of a coming recession as a result. 

Over the weekend the weather forecasts were moderated, and markets reacted badly. This is the reason given this morning for sharply lower prices. This reaction is very common for this time of year. The crop still has a long way to go. 

Turmoil

Next week we may be talking about hot weather again. July is coming, and the real weather effects are seen there for corn. Then we have August, where we traditionally worry more about the soybeans. So, weather concerns are still ahead, but the market’s job is to anticipate, which is why price highs are often in late June or early July. 

This is a year with a lot of turmoil. We have the war in Ukraine that is affecting the available corn and wheat for import around the world. 

We have some unknowns in planted acres of corn and soybeans, especially because of developing, and largely unrecognized by the market, large prevented planting problems in North Dakota and Northern Minnesota. And, we have the vagaries of growing weather to contend with. 

National yields

Take Nebraska, for example. There have been nine serious hail storms this spring in that state. Besides hail damage, which has caused 100% destruction for some of the crop, grain bins have been rolled over and center pivots have been blown over. The last storm blew over 360 center pivots to add to approximately 500 already wrecked. 

It is too dry in Iowa. It is too wet in the Northwest Corn Belt. It had been, until this week, too hot in many areas. It is ever so. Every year there are problems in some areas, but normally other areas compensate. That is why we talk about national average yields. 

So far we are still, on average, on track for a trend-line yield. Our current high price projections are not, however, a reflection of our crop size as much as a reflection of fears coming from the Ukraine war. A true weather market is yet to be seen. More volatility is still ahead.