Prices have popped higher on the Chicago Board of Trade the last few days. The combination of a rain-delayed harvest and a surprising USDA Grain Stocks Report have put a hold on the low prices of the last few weeks.
Timing is everything in this business, and the USDA report could not have come at a better time. Rains are currently delaying the corn harvest at the same time that USDA says we have had better usage of corn and beans than anticipated. Add to this the statistic that the harvest low is normally the first Friday in October, and a rally can be rationalized.
The harvest delay is in the eyes of the beholder. So far we are actually close to the historical track, but rain is forecast to continue to slow progress. The country is 24 percent harvested, with normal being 27 percent. Last year we were at the same 24 percent at this time. So, a continued bounce is dependent upon rain actually coming.
The grain stocks started the move, coming in lower than expected at 1.738 billion bushels left over on Sept. 1 — the start of the new marketing year. We had anticipated 1.754, with 1.731 billion left over last year. This was not a huge change, but it was in the right direction. This combination of market-movers led to a bounce of 16 3/4 cents in corn prices, the largest two-day gain in a year. This is the kind of spark that can change market direction, although technically the harvest pressure on prices remains.
December corn futures actually bounced off the Sept. 30 low of 3.25 to make a high of 3.47 3/4 Oct. 3. We were trading 3.45 1/4 Oct. 4, down three-quarters of a cent, but close to the high. Similarly, soybeans have bounced with the news that we ended the year with 197 million bushels of beans in the supply channels, nicely lower than the expected trader estimate of 201 million. Again, this was not a large change, but it was in the right direction.
The November soybeans put in a recent low Sept. 27, at 9.34. The high was Oct. 3 at 9.75, a 41-cent bounce. On the morning of Oct. 4 we were trading 9.68 3/4, which is down over four cents for the day so far. The grain stocks report was seen as negative to wheat, however. You have to hunt to see why, in my view.
Yes, the hard red winter wheat — which is the big part of the crop in this country — ended the year with 1.082 billion bushels, more than the 1.049 that the trade expected. However, all wheat classes together came in with 2.310, actually down from the 2.323 average trade guess.
In recent times The Chicago December wheat futures, which tracks soft red winter wheat that we grow, put in a low the end of August at 3.86 3/4. The high was Sept. 13, at 4.11. On Sept. 30 we got back down to 3.90. On the morning of Oct. 4, we were trading just above 3.94.
Crop conditions for corn and soybeans continue to drive the market to stay cheap, regardless at this minute of the harvest progress. For now, we still assume huge crops. The corn rating for good and excellent dropped one percent (the week of Oct. 3), but is still at 73 percent, historically high. The bean rating increased one percent (the week of Oct. 3) to 74 percent. We were at 64 percent last year.
Harvest progress for beans is at 26 percent, well off the 36 percent of last year at this time. The average, however, is still only 27 percent, so the bean harvest progress, like the corn, is dependent upon the accuracy of the weather forecasts. If we get the rain, we will be talking next week about actual harvest delays instead of possible ones.
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