Market acting as though the harvest is over

Price action last week on the Chicago Board of Trade would have one think that the harvest was finished.

We have rebounded strongly from what we now are calling the “harvest lows,” even though harvest is not over. Corn futures gained 301⁄4 cents for the week, which is most of the 311⁄2 gain on the month. Soybean futures gained a relatively lower 183⁄4 cents for the week.

Price gains have been what we would consider seasonal, with help from good margins for the users. We say “seasonal” when there is no good fundamental reason for the strong gains, and we are looking for one.

The obvious reason we hang on to is that the harvest is well along and harvest pressure is not the factor it once was. Other than that, we have no good reason for the gains, especially in corn, except that we made lows that were unreasonable for the carryout we are projecting.

Looking at the prices, December corn futures had an awful one at $4.971⁄2, Sept. 10. We saw the highest price since, at $5.85, Nov. 2. That is a huge gain of 871⁄2 cents. We were trading at $5.821⁄4, up $31⁄4 for the day.

The January beans, which we have switched cash bids to, had a low of $11.953⁄4 in the middle of October, but were trading at $12.55, up 6 cents for the day, Nov. 2.

Harvest on pace

Harvest is basically on pace, although faster in the West than the East. The East has had regular rain events that have left some of Ohio with standing water, even in spots on tiled fields.

It is not surprising that Ohio farmers concentrated on corn harvest this week, between the raindrops. The U.S. Department of Agriculture reported a 10% gain in corn harvest in Ohio for the week ending the evening of Oct. 31, up to 51% now. That is just off the 54% average pace of harvest. The nation as a whole was at 74%, which is actually faster than the normal 66%.

Meanwhile, the soybean harvest has slowed with the emphasis, even nationally, on corn harvest. Ohio has 75% of the beans off, up 5% for the week, and lagging the normal 81%. The U.S. has 79% of the beans off, just under the normal 81%.

The nation gained 6% of harvest over the week. Harvest supplies have re-filled the export pipelines, and grain is flowing normally now out of export terminals. We had been slowed as we ran out of grain at the end of the year. Export sales are not impressive, but shipments are.

Wheat

The wheat markets continue to be led by the short-crop spring wheat. As we have discussed at length, the spring wheat crop was ravaged by drought and lowered dramatically by lower acres.

Since there is no good substitute in the world for the milling qualities of our spring wheat, prices are soaring. Kansas City hard winter wheat and Chicago soft winter wheat are being pulled along to eight-year highs.

Canadian and Russian exporters are pushing out bushels, hoping to capitalize on the rallies. The result of this trading is Chicago and Kansas City futures just over $8, and the Minneapolis market approaching $12.