Market Monitor: This has been a strange summer


September is my favorite time of the year. It is warm during the day, but cool at night for sleeping comfort. The days are still fairly long, and we can sit out by the pond and enjoy the early evening, with weenies roasting over the brazier, and s’mores to follow.

Oh, wait a minute. That’s what we have done all summer. It has been cool like it is September. Last week temperatures finally drifted up into the 80’s. It seemed like the first time all year.

It is a little worrisome that we are getting some red leaves falling off our earliest maple tree in the front yard, but the ears on the corn plants are still flat and thin.
Now is the time when we wonder what we did with summer. I still have outside projects unstarted or started too late.

Bigger worries

For the real farmers, not those ex-farmer duffers puttering on their 10-acre farms like me, this is the summer of worrying about maturing crops, of enjoying the rains that were filling the soybeans, but struggling to bale hay without getting it rained on three times.

And, this is the summer when the farmers never really got around to making themselves sell grain in a down market.

Summer markets

The grain markets have declined steadily all summer. Prices have been driven lower by prospects of record crops over most of the Midwest. The temperatures that have been 10 degrees too cool here have been just cool enough to protect the crops in the west, where they burn off yield most years in August.

The monthly USDA crops have shown ever-increasing yields, with the latest predicting most of 4 billion bushels of soybeans and over 14 billion bushels of corn to be harvested soon.

The weekly Crop Condition reports have shown record and near-record conditions. Maturity ratings have reported a crop that caught up after a late start, then passed historical maturity benchmarks. In the process, farmers have been slow to commit grain to forward contract. It is hard to sell corn for just over $3 when you have sold it for $6.50 to $8.50 so recently.

It is hard to adjust to the reality of cheap grain when the input costs were as high as last year, but the prices are half. As a grain trader and sometime opinionator (I have gotten very shy of being an adviser), I have watched all this happen and have commented on it, but I have not pushed farmers to sell, except for the old crop.

It is not that I didn’t think grain should be sold on the way down. It is just that there is enough farmer left in me to hope that this is not what I get for the crop. And, I don’t want to be blamed for bad sales if there is a rebound. I have been there.

Just feels wrong

Scripture says the farmer should plant in hope. That really reflects the fact that he can do only so much. The rest depends upon factors outside of his control.

Outside of control this year is a big crop, which I am trying to see as a blessing. It is really a good thing to raise a big crop. In pure income, we usually come out better with a big crop in a cheap year, than with a poor crop in a high-priced year.

It just doesn’t feel as good as it did a couple of years ago when we had big prices and locally we had a great crop.

Risky time

We are now entered into that dangerous time when the new crop is close. The markets that had been steadily declining on better yields are pausing and maybe turning around a little.

I wish I could see that we are making a bottom. Right now Delta farmers are hinting instead at a new low to come with harvest of 70-bushel beans. However, a month from now, we could be talking about an early frost or yields that were not quite what was expected. These things could cause a rebound.

Politics abroad

Right now, the market is dwelling on political matters as a reason for a small rally. The Russians are invading Ukraine, although they are using troops without proper insignia and are denying any action. They say maybe some soldiers are traveling on vacation. (They seem to be taking their troop transports with them.)

While the Russians are taking over the rest of Ukraine, the market is worrying about the disruption that may result in the wheat markets, and Ukraine has the historical position of Breadbasket of Europe.

This potential disruption is reflected in slightly higher wheat prices. The higher wheat, in turn, is influencing other grains. So far we see no rally, just a pause in the markets with slightly higher prices. It remains to be seen if the political possibilities there overcome the agronomic realities here.

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