The lesson this week in the grain business is simple. You can’t always believe what you read, even if you read it here!
Recently I wrote with complete confidence, maybe even arrogance, that the harvest lows were in for the major grain. That was supposedly true even though we are still a little ways from harvest, unless you are on the Eastern Shore.
Early harvest
Harvest on the East Coast is on, which is early even for them. Early for them is usually because of drought stress, so is not necessarily good.
It just tend to fade the Pennsylvania bids we in eastern Ohio live on. Getting to the point, which I am struggling with, is that I was wr, wr, wrong. I watched the big bounce off the awful news of the recent USDA Supply and Demand Reports, and compared the bounce to the bounce of a steel ball bearing off a concrete floor.
That concrete was cracked last night, and the ball rolled off somewhere.
New lows
We made new life-of-contract lows in the corn, and we made a ten-year low in Chicago December wheat prices. Yuck and double yuck!
The wheat is easy to explain, even if it is hard to accept. The world is awash with wheat, except for France.
The French got excessive rains and a small crop. Every other major producing country seems to be making large crops, all at the same time.
Add to this the strong dollar of recent times. Mix in the tendency of buyers to live hand-to-mouth, waiting for the bottom.
Add the news as needed and you see what a recipe for price disaster looks like before it is baked. The baking comes over the next few months as we work to market this crop. The corn is a similar, if more local problem.
Local yields
We are the big corn producer, and we are doing well at it. As we keep saying in this space, the Ohio crop is a disappointment, unless you are in extreme northeast Ohio.
In my view I expect Ashtabula County to have the best corn and beans ever.
Not so as you go south and west, where we have had considerable dry stress until recent weeks. Ohio, and to an extent, Indiana and Michigan, is the exception.
The nation is on a roll toward a record crop well over 14 billion bushels, and the market is reflecting this expectation.
The only good news comes in the form of last week’s Pro Farmer tour.
They came up with an average yield of 170.2 bpa, versus the USDA estimate of 175.1. That would been encouraging if they had not been a little low on their estimate the last two years.
This might only be a trend, reflecting their methodology. Corn conditions, according to USDA, remained the same the last week at 75 percent good and excellent. This comes after just one week of a weakening condition report, and is at the high end of history for them.
Add to this the disappointment that it is looking like our exports are short of USDA projections. The official marketing year ends before you read this, on Wednesday, Aug. 31.
Some good news
A small piece of good news is seen in the fact that Brazil is likely to vote to allow import of GMO corn to supplement their short crop. This could result in 1.5 million metric tonnes to them.
The result of recent news for the corn is the contract low overnight going into Tuesday, Aug. 30. December futures got to $3.20, before rebounding to the current $3.20-3⁄4. Maybe “rebound” is too strong of a word.
The old low was $3.22-1⁄2 on the 12th, so we just barely went through it, although that does not help my pride much. The soybeans put in the contract low on Aug. 2, at $9.43 November futures.
We bounced to $10.20 ten days later, but overnight we were as low as $9.61-1⁄4. Currently we are trading $9.62-1⁄2, down almost two cents from last night’s close.
The soybean crop condition was reported to be one percent better this week. USDA is reporting 73 percent now good and excellent.
In the case of the soybeans, the exports are going to come close to expectations, so that is supportive for prices. Those December wheat futures touched $3.951⁄4 overnight for that ten-year low.
This Tuesday morning, Sept. 1, we are back to $4, up three cents since the close yesterday.
