Grain markets: The good, the bad, and the ugly


Certainly we can find good to cheer in the week behind us.

The weather, which has been so grim, has given us those T-shirt days I wrote about last week. Day after day, we have seen temperatures in the 60s and 70s and even touching 80 in the right spot. There has been no rain. Consequently, those on some gravel or those with some May beans have been harvesting.

For many, however, the bad news has been that the late beans are still not quite ready.

Monday I had several tell me that they had hope for Tuesday or Wednesday. The ugly news is that the rain is forecast to return Wednesday, and continue. The percentage chance of rain has been increased in the forecast in the last day, so that it is less likely we squeeze through. Maybe the best we can hope for is light showers, then a return to the October of our dreams.

Awaiting report

The trade will focus on the USDA Crop Progress Report, out the end of the day Tuesday. They will hope that the crops are getting a good start to harvest, and the good days we have had may help their enthusiasm.

It is much too early to get a market bounce out of delayed harvest, especially since we have anticipated since our late spring that it would be late this year.

Few wheat acres

Meanwhile, I do see a few acres of wheat making it into the ground in October. Some are going in after beans, some locally after chopped corn. I have to assume our total acres will be the least in many years, however.

Although some agronomists insist the best wheat has the least growth before winter dormancy, it will soon be too late for any growth.

I remember some of my best wheat coming in a year when dry weather dominated after late planting. I remember digging around on the tenth of November that year and not finding any wheat growing yet. When the snow went off the first time in March, I could see green rows against the melting white.

Has market peaked

It was nearly two months ago that I attended our outlook meeting in Ashland. I remember stating that the top of the market was defined when everyone thought the market had to go higher.

I commented that I thought we were trading this like a short-crop year. In those years, the run-up in prices is before harvest, and we have the high for the year before or during harvest.

Of course, we do not have a short crop, but a huge one. Still, it is not as good as hoped in March, and the demand has meant that there was fear all summer of running out of 2010-2011 crop and of tight carryout the next year also. Those fears have moderated a little, and the market has collapsed.

It would appear that we have over-reacted to the downside. Of course, we don’t like to admit that we over-reacted on the way up. That is the role of the market — to determine what prices out to be.

It was not that long ago that a farmer asked me if I were in the camp of those who thought corn could go to $10, or was I just looking for $8.50 or so. I told him I thought the party was over. (This was just before the crash.) He has not called me since.

December corn futures have now dropped exactly $2 from the 7.77 Aug. 30 high. The good news is that we may have finally put a bottom in, having rebounded nearly 30 cents in the last few days.

Soybeans have also bounce almost 40 cents after a drop of over 3.

The next thing to look for is credible evidence of what our yields actually are. I am in the camp that expects to see USDA lower the total some more in the January inventory report. The result would be better, but not radically higher, prices.

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