Market Monitor: Ugly transitional year defines market


For the last month traders, processors, and farmers have been frozen by our limbo market, wondering how low we can go. We have focused on the daily trading, watching prices slip lower most days, wondering when the slide would stop.

Every once in a while we get a blip up that gives us hope. This morning’s blip was probably based on news released this morning from the FSA. One morning letter put it this way, “FSA data reveals that 4.33 million acres didn’t get planted this spring because of adverse weather.” Specifically, that includes 1.58 million acres of corn, 841,000 acres of soybeans, and 1.38 million acres of wheat.

Reading that in the CHS Hedging morning highlights gave reason to the early bounce in prices that saw December corn futures up seven and a half cents, November bean futures up over a dime, and December Chicago wheat futures up nearly eight cents.

Knee-jerk reaction

The bounce did not last more than just long enough to talk about. By 10 a.m. the corn was up just a quarter of a cent, the wheat was unchanged, and the soybeans were down three and a quarter. What a market! So, the acres caused a knee-jerk reaction, but then the market went back to trading the same old 14-plus billion bushel crop.
Still worried. With the September full moon passed safely, analysts have lost enthusiasm for a really early frost, but remain cautious about one that is just a little early. As we have talked, the crop in some areas is susceptible to frost because of late planting and cool growing temperatures. The crop as a whole, however, remains statistically safe. That is, most of the crop is actually ahead of normal. It is places like Northern Ohio and the Northern Plains that still have worried farmers.

USDA numbers are reassuring. Corn harvest is four percent complete, although that lags the nine percent five-year average.

The Crop Progress report from Monday continues the 74 percent good and excellent rating we have seen before. Eighty-two percent of the crop is dented, which lags the 85 percent average just a little. 27 percent is said to be mature, which would be a measure of the presence of the black layer. However, there we are significantly behind the 39 percent average.

Locally, some corn is starting to hang ears, and the earliest bean fields are dropping leaves. The same farms, however, have corn and beans that are much later, planted after the last gush of planting rains. So, we have to conclude that there is some risk in the weather yet, and the risk is more to local farmers than to those in most of the Midwest.

It does not help that temperatures are forecast to remain below average for the rest of the week. We expect a round of warmer temperatures next week.

If all the crops get mature without a killing frost, one private estimate is for a corn yield of 172 to 175 bpa and a soybean yield of 46.5 to 47 bpa. Early bean yields in the south are said to be in the 70’s, so we are on our way to a big crop.

Wheat prices

While we in Ohio focus on the corn and beans, others are watching wheat prices also continue the big decline. Chicago wheat futures were 7.65 in early May, and are down to a new low of 4.96 on the December contract Monday. The Australian government is expecting the global wheat production this year to be as much as 714 million tons.

In June they predicted 696 million. Spring wheat harvest in this country is now 74 percent done, which is behind the 86 percent average, but is up 16 percent for the week.

The crop was planted late and is being harvested late. The northern farmers need good weather to continue so as to not lose any wheat to snow or wet weather.

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