Market takes breather after move up


The rainy weather that has plagued farmers since the middle of May took a breather the last few days. Three or four days of sunshine and warm — but not hot — weather has perked up some corn and soybean fields.

Farmers were still speculating about the permanent damage done over the last six weeks when rain hit in some areas again Monday night.

Market breathes

The worst of the weather has contributed to the best of the market recently. We have seen big bumps in prices, although recent days represent a breather in the price gains. That pause in the upward correction may be a reflection of better weather, or it may be a realization by the market that we have gone a long way and we need to step back and take a look at what the crops will really be.

Crop report

After the day session on the Chicago Board of Trade Tuesday, we got the weekly progress report from the U.S. Department of Agriculture. The most closely watched part of this is the Crop Condition Report. Ohio corn crop condition has declined 19 percent in each of the two previous reports.

On June 29, we saw the swampy conditions spread into Indiana and Illinois, with declining conditions reported there. Now the market appears to be on the defensive, giving back a chunk of the recent gains.

Caution needed

We have to be cautious, though, because we have made significant gains the last two weeks. September corn futures, for example, have gained 78 3/4 cents from the double low the middle of June at $3.52 to the high July 2 at $4.30 3/4. Farmers have been begging for cash corn above $4, and they got it, although basis has been widening lately.

Similarly, December corn futures gained almost 78 cents to a $4.39 3/4 high. November soybean futures gained $1.44 3/4 to the July 1 high of $10.40. September wheat, even though it is in harvest, gained $1.29 1/4 from the low of $4.88 1/4  on June 19 to the June 30 high of $6.17 1/2.

Wheat futures

It should be noted the Chicago wheat futures are in an official uptrend, and have been. A look at the chart shows lows that are getting higher. We have $4.69 1/4 on May 5, $4.79 on June 1 and $4.88 1/4 on June 19. The wheat has been pushed by the same rain, but for reasons of damage to harvest. In some areas of the country, the harvest is being delayed, which is never good.

Where we have had regular rain, we have had severe damage to test weight and other quality factors. A huge percentage of our central Ohio crop has enough sprout damage to make it unsuitable for milling. As we go north, the problems are less. Some elevators report that the early harvest is acceptable, but the fear is that it gets worse.

Sprout damage

Farmers struggle with the concept of sprout damage, as they watch their grain being graded. This is an area that is a nightmare for elevators. If employees are not rigorous, the elevator can lose big money. But the public relations aspects are horrendous. The problem often comes because the farmer thinks sprout damage means there is a sprout hanging off the kernel. In fact, if the normally pointed end of the kernel is starting to swell, it is damage.

The reason behind this is not that the receiver can hose the producer. It is so the receiver does not get blindsided by a mill that will not receive the wheat when it is passed on. Flour mills will do a test for what is called “falling numbers.”

This is a measure of enzyme activity, and it predicts how the wheat will rise as it is baked. As the kernel first starts to swell, the falling numbers go down. First, there are big discounts, then there is rejection by the flour mill.

Where flour goes

It is the privilege of Ohio farmers to produce flour for the cookie industry. Anyone can grow bread flour. The poorest quality soft red winter wheat goes into Pennsylvania to make pretzels, and then, if it is not good enough for that, Pop Tarts.

Our best wheat goes to the most particular users. When yours ends up at the mill at Kent, Ohio, and goes out to Pepperidge Farms and Archway, those end users need to know a certain dollop of dough will spread to a known width as it bakes and that there will be a certain weight for the dozen cookies to correspond with the preprinted information on the label.

I continue to urge local farmers to take wheat off as wet as possible to preserve quality. By next week, this misery will be over.

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