It was a bad month on LaSalle Street


Any way you look at it, July has been a tough month in Chicago. The LaSalle Street losers have seen corn down $2.63, soybeans down $2.79 1/2 and wheat down nearly $2. All of these commodities bounced back, but the results have been grim for those on the long side of this market.

Grains have made all-time highs in recent months. The wheat high was in March, but the corn high was the end of June and bean highs were in early July. Now the highs are gone and we are trying to find our way in the darkness that is the Chicago Board of Trade right now.


When there is a lot of marketing light, decisions and directions seem plain. When we are muddling around trying to find direction and reason, we seem to be looking through a glass darkly.

The highs were made when it seemed the end to problems was nowhere in sight. First it was unmitigated demand of corn for ethanol. Then, it was USDA saying our acres would be down. Then, it was delayed planting.

We followed that with severe flooding in the most important areas of corn production. Just when it seemed all the bad news was in, we weathered a forecast for hot, dry weather to add insult to injury. At that point we crashed.

The top always comes when everyone agrees prices have to go higher. There are no sellers and the market runs out of steam.

Now is the time of reality. Where the corn survived, it looks great. Northeast Ohio is a great example of that. Most farmers I talk to will reluctantly admit that the crops are the best they have had. Yes, there are a few yellow streaks where the corn got denitrified, but the heat has been perfect, the rains have been large and regular and they are smiling ear to ear.

Being farmers, they are also imagining all kinds of things that can still go wrong.


What has gone wrong is that we preached to them for 20 years to sell corn ahead when prices are high and when we were making the highs, we could not afford the margin calls to buy from them. Even with this break, the elevators and processors only want to talk about nearby prices. Haul it today and there is a price. Plan for harvest and there may not even be a basis.

Looking at the numbers, December corn futures made the all-time December high at $7.91 June 16, then $7.95 June 26, then $7.96 June 27. In less than a month we had lost $2.33 off that, to $5.63. In the next three days we got back over 40 cents. Now that is volatility!

November soybean futures made the high July 3 at $16.35 1/2. Beans in the teens! That’s been the rallying cry since 1973 when I was still new in this business and it was finally here. Here and gone, as we took $2.79 1/2 off the price in three weeks. We have bounced 40 cents there, also.

The wheat has been a different issue, as we broke the all-time high of $12.78 in March (Wheat in the teens? How could that happen?) to $7.47 by the end of May and harvest. It was a steady decline, with few stops in between.

From there we put in a great bounce to $9.71, up nearly $2.25, but then broke it nearly two bucks again. The low was just last week at $7.75 1/2, but we had bounced 50 cents by July 28.

No fun

Never has the market seen so much volatility. Never have the commercial interests struggled so much to manage business. Never has the producer seen so much volatility.

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