Grain markets need some hope


In the grain business we have the phrase, “talking your own position.”

This refers to the tendency to guide conversation in the direction that would support your own position in the markets. A trader who is long the market, for example, can only see the crop getting smaller or exports getting bigger.

Those are the matters he wants to talk about. The biggest example of this I have seen recently popped up in yesterday’s CHS Hedging Afternoon Wire: “AGCO CEO Martin Richenhagen disagrees with current projections that ag prices are headed lower.

“I couldn’t disagree more that grain prices are expected to decline for the next 5 to 10 years.”

Tough times

Yes, and I f I were selling ag iron, I would want to feel the same way! The reality is that it is hard to find news or outlook that makes it fun to farm right now.

We saw the good times come with the ethanol boom, and now they seem to have gone away as the farmer increased production in response to the unheard of demand we saw then.

Now we have ratcheted up production with acres and yields and are back where we started from, only with higher land and input prices.

“How’s that working out for you?” as Dr. Phil would say.

Poor year

If you want to really suffer this year, farm in Ohio where the crops are poor at the same time the prices are.
Locally the soybeans are turning color, and I think it is mainly because they have given up. They have run out of water and ambition at the same time.

Giving up

Well, beans don’t really have ambition, but at some point the genetic code tells the plant to use the last of the energy in the plant to make some seeds to reproduce for another chance next year.

The corn has run out of nitrogen and water, and locally we see fields that are fired up and dairy farmers who are chopping. It is going to take a lot of acres to fill the bunkers this year.

The ten acres of hay next to my yard is a living example of the kind of summer the dairymen are having. One cut was made late, after waiting out the rains. Since then we have had so little rain that it has not grown back enough for another cut.

Lawn work

I gauge the grain crops by how hard I am working to keep ahead of my lawn. I mow six acres, and the last time I cut it, all was for the fourth weekend in July, when family was coming to visit and I wanted it to look nice.

Last weekend I clipped some, cutting off the plantain, the nut sedge, and a little tall fescue where ragged patches stuck up above the regular lawn grasses. I don’t have a grass catcher, but I didn’t need one.

Sometime this month I will clip the rest, but there is no hurry. There is no hurry in this market until the Sept. 11 Crop Production Report from USDA. The weekly condition report shows no change in soybeans and a one percent decline in corn, to 68 percent good and excellent.

By comparison

That is well off the 74 percent of this time last year, but Ohio is only at 49 percent. The soybean ratings are similar.

The U.S. stayed at 63 percent good and excellent. We are usually at 72 percent, on the average. Ohio lags at 48 percent.

There is no big news left to process for this crop year. It remains to be seen if the crops end up as good as the estimates. The market could rally into late harvest as yields are a little less than expected.

Where the crops are good they are very, very good. Where they are bad, they are awful.


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