It is hard to keep a wild drought market going when it rains. Funny thing, that.
Most of the Midwest is dry, but timely rains last week have salvaged the crop in critical areas, and have kept a big crop going in others. Meanwhile, Ohio got widely scattered showers, which means most areas got nothing.
It is hard to get a handle on what weather did for the crops last week, but the market reaction was rough.
Corn and wheat futures just paused for breath, but the soybeans had a rough week, ending with November futures down 25 1/2 cents at 13.17.
December corn futures were off just a quarter of a cent, while September Chicago wheat futures were off 1 1/2, at 6.49.
The market is still dealing with a USDA report that severely cut soybean planted acres and increased corn acres. The result has been a severe drop in corn prices, but a boom in soybean prices.
One expert I heard this morning made this comment: “I don’t believe the acres reported, but we have to trade them right now.”
He has previously said that, “A lot of traders have lost a lot of money betting that USDA is wrong!”
Report
The weekly USDA Crop Progress report gets a lot of attention, too. The condition report, part of the Crop Progress, was dismal last week.
Soybeans had the lowest ratings since 2012, at just 50% rating good and excellent. Corn ratings last week were 51% good and excellent.
July 10 the new conditions were rated much higher, after general rains. The soybeans were at 62% good and excellent, the corn was at 64.
Sadly, we still see very low ratings for the excellent category in each. The corn shows 8% as excellent, but 10 of the 18 states reported are single digit, with Nebraska at 21 percent excellent skewing the average.
Remember, Nebraska is the state with a lot of irrigation. As for Ohio, our ratings went from 51% last week to 64% this week. That is a huge difference.
Need more rain
Even where there was no rain, I had reports of good crops. We need timely rains to get through this, but this improvement will put some optimism back into Ohio farmers. As usual, there are good and bad spots.
On my conference call July 10, two Illinois farmers argued about the crop. One was seeing good rains and huge improvement, one was seeing short corn and rain that maybe came too late to have farmers expect good crops.
One report from Minnesota was that the Twin Cities area was 8 inches short of rainfall for the year so far. And the crop in southern Minnesota is tasseling in the dry.
Put this together, and the huge gains in condition this week still forecast a crop that is suspect.
We have a USDA Supply and Demand Report out this week, but it is expected that they will not change the corn yield projections in this report. They normally do not, in the July report.
So, we have a market that can still do anything. As long as USDA corn acres are traded, it will be hard to see corn go higher, even with the potential for continued crop production problems.
As long as soybeans have not made it to August, the critical month for bean growth, it will be hard to kill the bean market.
Looking at the numbers, December corn futures traded a spike high of 6.29 3/4, June 21. The low was July 5, at 4.85 1/2. This was the lowest day since October of 2021!
We gained a nickel July 10 in the day session, after bouncing to 5.09 1/2, July 7. We are down one and three quarters cents in the night session, July 10.
December corn futures are still now below $5, at 4.97. The November soybean futures had a high at 13.91 3/4 on July 3.
The recent low came just four days later, at 13.15 1/2. Soybeans lost 25-1/2 for the week, but July 10, they gained that back and more, closing at 27 3/4 up.
We have added 6 1/2 cents so far in the night session, so we are trading 13.52. Wheat prices are a function of what class of wheat we are talking about. Our cookie wheat, traded in Chicago, lost a penny, to 6.49 September futures last week.
We lost 3 1/2 cents July 10. In the day session, are off another 1/2 this evening, trading 6.45 3/4 September.
Wheat
Wheat harvest is pretty much over except in northeast Ohio. Yields, as expected, are phenomenal. I have heard of one yield in northwest Ohio at 120 bpa.
I have been expecting reports from Trumbull County of as much as 100. We will see soon.
The Minneapolis hard spring wheat was actually up over 30 cents last week, with crop problems in the Northern Plains.
(Marlin Clark has been observing and trading cash and futures grain markets for over 50 years. Comments are welcome at 440-363-1803.)
