It should not surprise us in this most volatile year that the grain markets are staging another rally. We gained 35 cents in corn last week and 62 cents in soybeans.
Those gains would have felt better if they had not come after huge losses. The corn, for example, just got back half of the drop!
We are seeing follow-through early this week, however, so the feeling is optimistic right now. July 19 the December corn futures gained 6.25 cents to close at the high of 5.581⁄2.
We added 121⁄2 cents more July 20, so far, to a current 5.613⁄4. Of course, we were at 6.111⁄4 once on the first of July.
November soybean futures, meanwhile, gained 15 cents to 13.873⁄4, July 19. We have added 201⁄2 cents the morning of July 20, to 13.973⁄4.
Yes, we had a high of 14.23 on that same July 1, but we are fairly close to that now, and it feels good to be going in the right direction.
The market continues to focus on weather and crop conditions. The United States Department of Agriculture reported corn conditions at 50% good, 15% excellent for a total of 65%, July 19.
This is the same total as last week, but one less in the excellent column. Ohio conditions, meanwhile, are reported as 54 plus 21 for 75% good and excellent.
This continues to show us near the top of the country in ratings. But, remember that last year at this time we had the nation at 69% total.
The U.S. soybean conditions have supposedly gained 1% for the week. This is likely believable in the east, but not in the west, which is still burning up in the Dakotas and parts of Minnesota.
The nation is at 60% good and excellent now, with Ohio at 67.
Talking to observers across the Corn Belt, July 19, was interesting, mainly for the relief as rain has been reported in most areas. It was hard to listen to the sense of desperation in voices over much of June.
It is starting to be believable that we could finish out the year with a near-trend line yield. However, last year we were below trendline, at 172 bpa, and we had better crop conditions reports at this time.
In addition, we have a 90-day forecast for hotter than normal temperatures and continued dry conditions in the west. It is a good time to remember that the market is all about the average, however.
There are always areas of record crops and areas of poor. However, the dry area already noted is especially important for soybean production, as it represents normally a quarter of the crop.
The question now is not what their crop will be, but will it be offset by especially good crops in Ohio, Indiana and Illinois?
Much of the market focus in the west is on the spring wheat crop. The Minneapolis futures were up over a dollar last week as the realization is hitting the market that the crop is terrible, in addition to the fact that we planted few acres to start with.
The spring wheat is normally used to raise the protein of the winter crop from the central Plains in a year like this when their protein is low. That increases the demand.
The Canadian spring wheat crop is even worse because of drought. Also, their canola crop is now thought to be half gone.
The problems in the spring wheat has helped the Chicago market gain 77 cents in the last week.
The problems in the wheat markets are not over, even though the winter crop is now in the bin.
Normally, we see a high just before harvest in a problem year. This year, the attention is on the spring wheat, which will be harvested in the fall.
So, the party is not over, even though we are now into the end of July. As I have said in previous weeks, the highest prices are normally before this.
We have extraordinary reasons why that may not be so this year, although we are still a long way from the contract highs made in May for corn and in June for soybeans.
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