Harvest pace controls grain market

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soybean harvest
Soybean harvest (Farm and Dairy file photo)

The relatively slow pace of the national harvest is moderating the normal harvest glut of prices. The pre-harvest lows have held in corn and soybeans. Soybean prices have actually gotten better.

The harvest pace in eastern Ohio has been at a record, according to my memory, but the national rate of harvest has lagged in the last week with damp weather. Rain over the weekend and especially Sunday night has stopped what has otherwise been an early and fast soybean harvest for our farmers. Some of my customers report they are finished with soybean harvest, while others are smiling about what has been accomplished.

Yields have been much better than expected early in the year, when the beans were short, yellow, and spotty in population.

While the local soybean harvest winds down, the corn is not yet ready. There are a few fields getting close, but no one is in a hurry to pay to dry cheap corn.

No progress report

The Monday Columbus Day holiday prevented USDA from releasing harvest data until Tuesday afternoon. That means we get to guess at the progress.

Traders are guessing that the U.S. corn harvest is now 29 percent done after a slow week. They guess the soybeans are at 36 percent. I am assuming that Ohio will come in less than the nation, but that the Ohio soybean harvest is way ahead of the national number. For betting purposes, put me at 52 percent.

Thursday USDA will put out its supply and demand numbers, which include production estimates. Traders are expecting fractional increases in yield for both corn and beans. This continues the widely held view that “a big crop keeps getting bigger.”

That maxim mostly reflects the conservative government report procedure, where they are reluctant to make large changes in predictions. The result is several small increases instead of one large one.

It also, as I admitted last week, goes against my long-held conviction that the harvest would disappoint. I have not shaken out all the farmer in me, even after 30 years without stirring soil.

Current prices

Looking at prices, we see that the corn is going sideways, while the soybeans are gaining a little.

December corn futures have bounced along near the lows. As this has happened, the highs are progressing lower. That is, the range in the trading is getting smaller, resulting in a pennant formation.

As trading gets squeezed into a narrow range, a breakout in one direction will happen soon. We hope that is a breakout to the better side of prices, but we could actually get a good stretch of good weather and put harvest pressure into prices to break the low.

We use “harvest pressure” as a term to describe what happens to prices when much of the action in the futures market is negative as the elevators hedge harvest grain prices.

At these prices, the farmers will resist selling as long as they can, so the pressure may not get extreme.

December futures put in the low back on the last day of August at 3.44 1/4. We have traded four lows since then, at 3.45 1/2 on Sept. 12, 3.46 1/2 on Sept. 16, 3.48 1/2 on Sept. 27, and 3.46 on Oct. 4. This Tuesday morning we are trading 3.50 1/2, up a penny.

November soybean futures are trading 9.74 this morning, up seven and a quarter. That gets us back where we were yesterday, after a late loss of nearly 6 cents Monday.

The November futures soybean low was at 9.21 on Aug. 16. Since then, the lows have been progressively higher. We had 9.31 1/2 on Aug. 30, 9.37 1/2 on Sept. 12, and 9.52 1/2 on Oct. 3.

December wheat futures are 4.35 1/4, down most of a cent. This comes after a high of 4.62 3/4 on Sept. 27. Some foreign wheat news has been negative lately, especially that the French crop is up more than a third from last year.

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