Markets continue to confuse producers

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Money markets graphic
(Farm and Dairy file photo)

So, if the crop conditions are actually getting worse, why are prices going down? This is the question that continues to confound farmers who are wanting to clean up old-crop corn supplies and price some new crop.

Rallies in the grain markets have died off in recent days, even though crop conditions continue to decline. This has put some confusion in farmers’ minds as they are forced to make marketing decisions. Attempting to explain why this has happened is not easy.

Price rally

Corn and soybean prices rallied sharply in early July as the market worried about the extremely dry areas of the western and northwestern Corn Belt. This happened while USDA crop ratings in Ohio, Indiana, and Illinois declined sharply. It also happened while the east was too wet, and Illinois had flooding.

Reality in the form of rain in the West dropped corn prices 35 cents in two days, July 12 and 13. The high was made July 11 at $4.171⁄4 December futures.

The 13th, we saw $3.81 3⁄4. We quickly returned to $4.06 3⁄4 on the 20th, buoyed by poor Crop Condition Reports. However, recent days have seen us as low as a few ticks below $3.80. On this Tuesday morning, Aug. 1, we are trading $3.81, down almost four cents.

This decline comes as, locally, we still are looking at yellow, short soybeans, and corn that seems to be improving, but can never fill in the spots stunted from too much rain. In Ohio we are rated just 57 percent good and excellent on the corn crop.

That is, however, a one-percent improvement for the second week in a row. The U.S. rating has actually declined another percent, to 61 percent. That compares to 76 percent at this time last year.

Soybean situation

The national soybean situation is a little better. The good and excellent rating is 59 this week, up two percent from last week.

Of course, last year at this time we had a 72 percent total rating. The Ohio bean crop is rated this week at 48 percent good and excellent. That is up one percent from last week.

The soybeans continue to grow as if defining a soil map. I see some terrific beans on gravel soils, and some very disappointing beans on the clay loams. I still have the hope that good weather in August sets pods and gives us better yields than we expect now.

For beans, if there is a stand, August can be the most critical month.

Looking ahead

Looking at the price moves, we see September corn futures with a recent low at $3.64 1⁄2 on June 23. The high came at $4.04 3⁄4 on July 11. By July 26, we were back down to $3.66, then bounced to $3.77 1⁄4 on the 27th. By the 31st, we were back down to $3.67 1⁄2.

Similarly, we had a December futures high at $4.17 1⁄4, and the low at $3.74. The spread between the old crop and the new has narrowed more than a nickel. The old crop has been seen as more valuable as we still work through the huge crop from last year.

November soybeans had the low at $9.07 on June 23. The high was $10.41 on July 11, a huge gain. We dipped to $9.84 on July 14, then got back to $10.35 1⁄2, near the old high. Currently we are trading $9.86 3⁄4, down $201⁄2 for the day so far Tuesday morning. Yuck!

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