In the famous song, we were told that “it’s 5 o’clock somewhere.”
It was a justification for drinking before the “sun went over the yardarm,” which is the British standard. Today I am thinking, it is harvest time somewhere. The latest U.S. Department of Agriculture Crop Progress report added a page for harvest progress.
This reports that Ohio farmers have harvested one percent of their corn and soybeans. For the U.S. that is seven and four percent, respectively. The ugly truth is, harvest is here, even if “here” is not here. (It depends on what the meaning of “is” is.)
Harvest prices
I say that because our price structure is now based on the harvest, not on old crop demand. It does not matter if the harvest has reached us; the harvest prices have.
A quote from the CHS Hedging morning letter is informative: “Demand for U.S. corn is poor, old crop stocks are plentiful and cash markets are weak, despite the lack of farmer selling.”
In other words, prices are too low to inspire farmers to sell, even though they own corn. Even with the cheap prices, no one is lining up to buy corn because they see it getting cheaper.
Will corn get cheaper? With basis declining, the cash price will go down even if the futures have put in a low. And, there is no guarantee the low is in. The farmer in me wants to believe it has, but the sure sign that prices will go lower is if everyone agrees they can’t go lower.
So far the December futures low is the $3.44 1/4 of Aug. 31. Throw in harvest basis and you are talking about corn near $3. We bounced to $3.62 on Sept. 6, but made another low at $3.45 1/2 on the 12th. We are currently, on Tuesday morning, at $3.52 3/4, up one and a quarter. The little bounce felt good, and gave us the feeling the low might be in. The new low made us worry that the worst was still ahead.
Crop estimates
What is definitely still ahead is enough harvest of corn to indicate the validity of recent crop estimates. Two months ago I was convinced the crop was over-rated. It has improved vastly in that time, and now I am not so sure.
I have wanted to believe that a harvest surprise would be smaller crops and a confirmation that the low was already in. Now, what I never really knew is getting to be less knowledge and more fond hope. Keep hoping. Or, as the plaque on my wall says, “Pray for a good harvest, but keep on hoeing!”
If you look at the actual ratings put out by USDA, and perception of better corn is not reflected in the numbers, however. They rate Ohio at 62 percent good and excellent, which is an improvement. They rate the US at61 percent, the same as last week, and 13 percent below the rating for last year.
Soybean prices
Soybean futures have been erratic, and not as low as corn prices. That means, yes they are low, but they are not bouncing on the contract low. That came back in the end of June at $9.07 November futures. Be bounced $1.40 to $10.47 on July 11, then crashed back to $9.21 on Aug. 16. We are trading this morning at $9.67 1/2.
USDA condition ratings for the beans show Ohio at 58 percent good and excellent. The U.S. is at 59 percent, a decline of one percent for the week. That is also 14 percent below last year, and the probable reason we have not made new lows for soybeans.
Chicago wheat futures have mostly declined since the wild rally in early July that gave us a December futures high of $5.92 1/4. The low came the end of Aug. at $4.22 1/2, which should tell us to reward a big rally, then hold on. Since the low we have been mostly sideways, trading a current $4.46.
