Grain futures markets are trying to hold onto gains this week. Corn and soybeans have rallied off the lows, but are looking for more news to sustain gains.
The wheat crop has soared off the lows. The Chicago soft red winter futures have made new contract highs. It is sad that we have to look to wheat for good news, but at least there is good news.
We have seen a steady diet of reports that foreign growers have smaller crops. Add to that the perception that we have over-estimated the American crop. The result is a new contract high, with the September futures hitting 5.93 on Aug. 2.
We are still trading September wheat at 5.76 this Tuesday morning, Aug. 7. The low, partly in sympathy to the sad corn and bean, was 4.711⁄4 on July 11. We gained over $1.21 in three weeks. The last price higher than this new high was the five-year high at 6.11 in July of ‘17.
Soybean issue
I wish I could be as optimistic about the soybeans. We have been hanging on Chinese tariff talks for months now, hoping for a return to normal.
A few days ago we were 25 cents higher early in the morning on news that the Chinese were going to talk. The next day we started out 17 cents lower on news that President Trump was going to put 25 percent tariffs on some Chinese goods instead of the previously announced ten percent.
It is easy to find bad export ideas. This morning, CHS Hedging’s letter mentioned that a Chinese study demonstrated that they could cut imports by 10 MMT by reducing the protein in their ration. So much for the idea that soybeans are a world market and eventually we sell to someone.
Ideas like this spook us that the total exports could be reduced. In fact, we still exported 32.8 million bus. this week, nearly twice the 17.7 mb needed to meet our USDA export target. This morning we are starting out positive on beans, with the November futures contract up nine cents.
Sadly, this is not because of any export news, but because the USDA Crop Condition Report fell more than expected. We expected a one-percent drop in the good and excellent total this week, but USDA released a rating that was down three percent, at 67 percent.
Last week we had 70 percent, last year we had 60 percent. So, the crop is off, but still huge. Ohio came in at 72 percent good and excellent, above the nation as a whole. In recent times soybeans have rallied from the 8.26-1⁄4 low of the middle of July to the 9.22-1⁄4 high the last day of July.
Corn rating
We are now trading 20 cents off that high. The corn ratings dropped one percent to 71 percent good and excellent for the country. This was expected, so caused no price change. Last year we were at 60 percent, so, again, we are still looking at a huge crop even compared to last year.
Ohio crop condition is now at 76 percent. Corn prices are up a penny this Tuesday morning, with the December futures now at 3.86-1⁄4. Good weather is forecast, which is not good for prices right now, but is good for the crop. USDA will release the world Supply and Demand Report Friday at noon ET.
There are ideas that the corn crop size could be increased in this report.
