The United States Department of Agriculture continues to give us great crop ratings, and the market continues to stagnate. One more week of good news being bad news.
Last week, the USDA raised the crop condition report by 3% for corn and soybeans, and results were predictable. On July 31, the market gave us a new September futures low of $3.141⁄2. The market sees all the news as being about good weather and bigger crops. The forecasts for hot and dry weather did not come true. Temperatures remained perfect over the corn belt, and there was enough rain to satisfy in most areas.
So now we look at new forecasts for hot and dry weather with a wary eye. Maybe it happens, maybe not. It is too late to hurt the corn during pollination, which is finished in major growing areas. The crop is early in major growing areas, and some farmers who saw heavy rains say the crop is made. They also are talking about harvest starting in August in southern Illinois.
The hot, dry weather, if it comes, could effect the soybeans, so they did a better job of maintaining prices. November futures were down almost seven cents for the week, but there were no new lows. November soybean futures got close to $8.80 July 30, but the old low was at $8.711⁄2 back July 13.
Soybean prices have been supported a little by export sales. For 11 days in a row, we sold soybeans to China, according to reports to the government. We now have serious amounts of old and new crop beans and corn sold to China, with the market wanting to believe the Phase One agreement with them will be met. That will work if the Chinese separate their need for grains from their face-losing problems.
Every day seems to bring new negative remarks from our administration about the Chinese. First it was the virus, now it is Tik-Tok, a very popular software program in this country which the Chinese are supposedly using to mine data from much of our population.
So Aug. 3, the USDA did not raise corn ratings, but they did keep them the same. They raised soybeans ratings by 1% in the good category, and 58% good and 15% excellent had the market defensive Aug. 4. November soybeans are now down over five cents, to $8.91, after being up almost four cents the day before. I guess that is a wash, but it does not feel that way. It feels negative.
It is unfortunate that Ohio crop ratings are not as good as those for the country as a whole. It is fine to say we are better off with good crops and poor prices than with poor crops and good prices. Trouble is, Ohio is lagging the U.S. in crop condition.
Part of this is that two major parts of Ohio were too wet this spring. For the most part, we in Northeast Ohio are looking pretty good. Isolated spots of the Midwest are very dry. Scattered rains and all-day drizzles this week helped the crop along, and we have a big crop coming, if it is a little late. It is hard to find a farmer near me who has any real complaints.
The USDA rates the Ohio corn crop at 44% good, 8% excellent for a total of 52%, 20% behind the national rating. The soybeans are rated at 51% plus 8%, for a 59% total against the nation’s 73%. So, we watch the weather, and we watch the prices.
The ugly truth is that advisors are openly talking about the long-term support for corn at $3. That was not a bad price in 1973. We have touched $3 in 2016, and in 2009 and 2008. We hope to never touch it again.
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