Some days it is hard to remember what is good and what is bad when you look out the window. If you are a farmer, you have to be happy that you have gotten significant rain the last two weeks after a spring and early summer that left the ground parched. There was a time when farmers in some areas wondered just how bad a crop they were raising.
Then it rained, and I hope you can be glad looking at the crops. I know it’s not fun looking at market reports. I write this in the middle of Aug. 7, when I just got a posting on my phone that said November soybean futures were down 38 1/2 cents and December corn futures were off almost five cents. Blame the rain, but be glad for it. The Chicago December wheat futures are up almost 12 cents, so I hope you have some in the bin.
According to scripture, the farmer must plant in hope. I know how it feels to do a preplant budget that says you will lose money, and then plant anyway and hope things change. I have said it before; however, it is better to grow a good crop in a cheap year than a poor crop in a high-priced year. It is just hard to take the fact that the rest of the world gains when you are selling too cheaply.
Corn feels cheap right now. We were down 33 cents last week, and in one day, were are now down 38 cents more. This is as much fun as a drunk has staggering out of the bar at 2 a.m. It felt good for a little bit, then it was uncomfortable, and now he is wondering if he can sneak into the house without waking the wife.
I feel that way about the grain market. It felt good for a while when we were making good planting progress without the rain, then it was uncomfortable wondering if we would get rain, and now we are just wondering if we can sell some cash grain off the combine without waking the banker into realizing that we need to pay the operating loan back.
A corn price that starts with a “4” is not going to go nearly far enough. We are trading at $4.96 December futures right now, so maybe we can squint a little and think it is almost $5.
November soybeans have been very volatile, and looking back to our high July 24 shows us just how volatile. That day, we put in the recent high, at $14.35. We are now trading $12.98, $1.37 lower.
The soybean market can always find things to talk about, be it exports, or the Ukraine mess, which has little directly to do with soybeans, but news there tends to bleed over from the other markets. The truth is that the market is focused on the weather, with the idea that beans were not looking great after growing in the dry for so long but that the critical time was August.
Well, we are now in August, and the weather is great. We have had long spells of high temperatures that were not too high, and most areas have recharged the water needs.
This morning, I listened to reporters all over the Midwest on our weekly conference call. Everyone had rain to talk about, from two inches in South Dakota to over five inches in parts of Iowa. Part of northwest Iowa had 12 inches! I assume they think that was something to complain about, but most farmers that had several inches said the ground soaked it up. Imagine a dry sponge that’s about four feet thick.
So, now we have farmers saying they are looking good for August, and the market is reflecting the optimism that has returned to the crop by taking it out on the prices. The exception is the wheat, where the winter crop is mostly harvested, and the spring crop harvest is started.
I am told that the spring wheat is not as good as the crop last year, but maybe a little better than normal. Add that to the huge cookie wheat crop in the East, and you have only the Ukraine war to give us a reason to have prices higher for wheat at least for today. We actually lost $1.42 off the $7.96 1/4 that we traded July 25, before the war news took us higher. We are now trading December Chicago wheat futures at $6.86, now up almost 26 cents for the day.
And, there is news from the war. Over the weekend, Ukraine attacked Russian Black Sea ports, probably as an escalation for keeping them from exporting grain out of the Black Sea. They also used a drone to attack a Russian oil tanker that was taking oil to meet Russian needs in Syria. It’s no wonder why 40 nations got together last week to talk about how the war needed to end. Mostly, they want it to end before a new policy here might require Europeans to pay for this European war themselves.
It remains to be seen how much this market can recover. We are a long way from seeing new yield estimates from the U.S. Department of Agriculture. We have to assume a good crop at this point, but it does still remain to be seen if we have as many acres of corn as USDA said after they raised their guess by three million.
The corn and wheat are down hard on improved weather. The market probably has overreacted, and prices will rebound just as we stop trading the new round of emotions.
The size of the rebound is the question. I have to assume we have missed the best prices, but that news will be a relief to those concentrating on filling bins at harvest. There were 240-bpa farmers looking at 100 bpa just a few days ago. Thank God for small green apples.
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