Market monitor: Harvest pressure hurting grain prices

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Prices rallied last week as the late, stretched-out harvest continued. However, this week prices are slipping again as the reality of storage space and a big harvest return to dominate thinking.

December prices

December corn futures are off more than six cents the morning of Nov. 4 at 3.67 1/4. This comes after a 3 1/4-cent drop on Nov. 3. Maybe this is just a correction to the large bounce of the last ten days. Maybe it is the reality of the huge crop as elevator space is starting to run out, but there is a big chunk of harvest remaining.

December corn futures put in the contract and harvest low on Oct. 1 at 3.18 1/4. By Oct. 30 we hit 3.81, nearly a 63-cent gain. Now we have lost a fifth of that.

Ditto for the January soybeans, which we have now started to use for cash pricing. This morning the January beans are off 13 1/4 cents at 10.16 1/2. The high was on Oct.  30, at 10.59 1/4. The low was 9.12 1/4 on the first, so we gained 1.47 for the month before retracing a little.

Harvest progress

The market is watching harvest progress, export pace, and storage space. The corn harvest is at 65 percent for the country as of the night of Nov. 2. That is a big gain from the 46 percent of last week. We are catching up to the average of 73 percent, which was two percent higher than at this time last year.

Ohio’s harvest

Ohio’s pace is well behind that, but has nearly caught up to the five-year average. We are at 52 percent, up from 36 last week, but off the 62 percent we had done this time last year. The average is 55 percent, so we were maybe a day behind the night of Nov. 2.

Soybean harvest

Ohio still lags the national and average Ohio pace with the soybean harvest. The nation is at 83 percent, which is exactly the average. We were at 70 last week, 85 this time last year, and the average is 83 percent for the country. Ohio has harvested 72 percent of the soybeans, up from 50 last week.  Last year we were at 90 percent, but the average is 83 percent. We will probably catch up this week, the way the weather is going.

Northeast Ohio harvest

I think extreme northeast Ohio is ahead of the average Ohio pace, but farther south and west the harvest is in major catch-up mode.

Corn exports

The corn crop exports have not been good. However, last week we exported 16.8 million bushels, but we need over 32 million a week to meet USDA projections.  Soybean exports. Soybeans are another story. We sent out 101.8 million bushels last week, a huge export. We only need 29 million a week to meet expectations, and we are 17 percent ahead of last year, which was a also a big export year for the beans.

Storage space

That gets us to storage space. Normally the end of harvest is where we see sloppy basis as the elevators slip their bids lower for grain they have to move out right away. This year space is tight, but the slow harvest for corn has helped basis. We are not as wide as normal.

Futures markets

The big crop is helping develop good carry in the futures markets, which can be a sign of expected price improvement in the market. I remain neutral to price movement. However, after the big bounce already, there still is nothing in the market to indicate a hope for good prices. We now have to look forward to cheap prices helping to move grain, and the possibility of fewer corn acres to be planted, or spring weather problems. I would expect the first, but would never bet against a big crop from our resilient farmers.

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