New highs, same whys

Corn, beans and wheat have made new recent highs on the Chicago Board of Trade this week, but there is no surprise.

Price discovery

The same factors that have pushed prices the last month continue to effect the ideas in Chicago of price discovery. Price discovery is the term the grain trade uses for finding the right price in the right time period for grain.

By running a grain auction continuously, the CBoT does not set the price, it discovers what the market thinks the price should be. This is not just semantics, it is a striking distinction, especially for those (mostly farmers) who think the Board controls things.

Soybean rally

This has been a soybean rally. Good exports and the fear of actually running out of beans has the processor markets bidding up basis and the Chicago Board running up prices. This has been in spite of delayed corn plantings that could auger a switch of some acres to beans.

The numbers from USDA show that we have mostly caught up the corn plantings, although we are well past optimum dates for best yields. Now the focus is actually on slow bean planting in critical states that may cut yields.

At the same time the market has focused on soybeans, corn has rallied on the delayed planting and on the bootstrap effect of the soybean rally. At this point, the corn rally should be expected to lose steam and just go along for the ride.

Wheat, meanwhile, has some yield issues, with delayed harvest from rain in the Southern Plains and delayed planting of spring wheat in the Northern Plains.

Look at the numbers

Let’s look at the numbers. USDA, as of Sunday night, had the US at 93 percent planted for corn. That was up from 82 percent the week before and right at last year’s 94. It is a little behind the five-year average of 97 percent.

Within those numbers, Ohio was at 97 percent, right on the average, up from 76 last week and above the 93 of last year.

Problem

Indiana and Illinois remain the problem. They gained significantly over last week to 78 for Indiana and 82 for Illinois. They should be done.

Those two states are far behind in bean planting, and that is pulling down the overall numbers. The US is at 66 percent soybean planted, versus a normal 79.

Ohio is at 84, just above the 83 percent average. Indiana is at only 50 and Illinois is an amazing 34 percent planted. MI, after an awful start I detailed two weeks ago, is now caught up on corn and close on beans.

New highs

On the Board, the new highs were 4.45 3/4 for July corn, 12.27 for July soybeans and 6.77 for July wheat. All three of those are lower on the Monday/Tuesday overnight.