Weather market: Hold onto your hat (and call your grain buyer ASAP)

storm damaged corn
Storm damaged corn.

Farmers beware! Hold onto that seed corn cap, as the winds of change have moved into the grain crops this week.

The weather market is here, and the traders are trying to determine if Monday was the big day or if there are more to come.

Finally (finally!), there came the idea that the crops in our country are maybe not progressing as well as thought.

Dry and cool weather has persisted, and traders are worrying about the crop size. Worry means higher prices, as USDA keeps confirming that the crop ratings are falling.

Monday afternoon USDA reported its Crop Condition Report. For the week we had 59 percent of the corn rated good and excellent, compared to 61 the week before. The soybeans were rated at 58 percent good and excellent compared with 62. So, the beans are fading faster than the corn, and it is the soybeans that have rallied over $2 in recent days. The corn has mostly gone along for the ride.

Market reaction

Monday was the biggest day on the markets recently, with corn up 20 1/4 cent on the old crop September futures and up 30 1/2 cents on the new crop December futures.

December futures have gained over 66 cents since the recent low of 4.53 3/4 on the 13th. Significantly, they put in a December high of 5.08 1/4 before closing lower Monday.

On early Tuesday trading the December is 5.00 3/4, fractionally higher.

December futures of $5 is a huge psychological number for many. Under that seems ridiculous after the prices of the last couple of years, even if that level was forecast at every marketing meeting this winter.

Reality came to visit last week, and now we are hoping it went away instead of camping out in the back yard like that city cousin with the new fifth-wheeler that you just can’t get rid of. (The cousin, that is. You can always get rid of the fifth-wheeler, even if you just tow it back in the edge of the woods with the old machinery your wife thinks you sold.)

It is the soybeans that have led this rally. Now is the time of year that the crop prices normally get worse and we regret not selling in June. Instead, the November soybeans put in a low of 11.62 1/2 on Aug. 7, then zoomed to 13.98 Monday, a gain of $2.35.

That is amazing, and after the report in the afternoon we still held onto the high, or close.

Trading early Tuesday, today as this is written, was off a little, but at ten o’clock we are back tapping on 13.98’s door once again.

Now what?

So, the question is, do we treat this like a shoot-for-the-moon rally, or do we reward these gains.

You know me — I am a rewarder. Call your buyer with some $5 cash targets for March or May and try to get something sold. Four dollars is still possible.

If we don’t hit the targets, sell a little by this time next week no matter what the price.

As for the beans, I would be at least half sold, right here. This is historically a good price. If it gets better, sell more. If it fades, dump it all before it goes away completely.

Two weeks from now we may know more about this market, but it may be too late. Catch this market while there is fear in it.

Told you so

I have long thought that the crops were overestimated because of damage early from too much rain and from modest temperatures this summer. I may be right, but it is hard to have perspective on the whole Corn Belt from a desk in extreme northeast Ohio.

It reminds me of a wheat trader Scoular had in corn country in Iowa. He was a great wheat trader, but he learned absolutely nothing about wheat from his own back yard. In fact, two different people have told me this week when I complained about local crops, that theirs were terrific. So, my perspective locally may even be wrong.

Get with this! Those of you who follow me regularly may be surprised. I always have some opinion, but rarely do I really have advice. Today we are in rare territory.

Do something today, even if it is the wrong thing.


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Marlin Clark is an associate of Russell Consulting Group, with a local office in Williamsfield, Ohio. Comments are welcome at 440-363-1803.



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