The perception that the crop conditions are improving has stopped the recent market rally on the Chicago Board of Trade. Prices have moderated in the last few sessions as traders think they see the corn crop in particular is recovering from recent stresses.
Unrealistic yields
Traders currently are said to be thinking that the corn crop has recovered to the extent that we could see trend line yields in the Midwest. Although this seems to be very unrealistic to those producers in Ohio and Indiana who are looking at roller-coaster yellow and green fields of corn, it remains to be seen if local perspective is off or if the market is engaging in wishful thinking.
Wishful thinking
Put me down in the wishful thinking crowd for now. Yes, the field I watch most, one I used to farm in southern Ashtabula County, is getting greener, but there will still be 200 bushel and 50 bushel corn in that same field. So also with many others across Ohio, where the West is actually worse than the East if rainfall amounts are the judge.
Better weather ahead
Yes, weather has improved, and we are looking at a sustained period ahead of us with less rain and more sunshine. We are still too cool, though, and we have a long way to go.
Corn struggles
The good corn is tasseling in Northeast Ohio, but some corn is still waist high and struggling. Some is stunted and drowned out completely. All the fields I watch look better from the road then they would from an actual walk-through.
Corn crop condition
However, the actual USDA Crop Condition Report out after the trading stopped July 20 showed that for the U.S., the corn was rated at 69 percent good and excellent, the same as last week. The traders may have been thinking they would get an improved number, but they did not. Ohio actually gained five percent, but only to 46 percent. I would agree that the Ohio corn crop got better last week, but I still question if it is even this good.
Soybean crop condition
USDA put the U.S. soybean crop at 62 percent good and excellent this week, and also did not change that number. The Ohio crop was reported to have slid one percent to 56 percent good and excellent.
Corn yield
Somehow out of this the trade expects a trend-line corn yield. They admit that the soybean farmers never got finished with planting, but the take from the pits (or from the computer screens now that the pits are no longer traded) is that the South American acres will make up for ours.
Prices
Let’s look at the prices for the last week or so. The biggest correction is actually in the Chicago wheat futures. There the September contract traded a recent low of 4.88-1⁄4 in the middle of June, then posted a high of 6.17-1⁄2 just 11 days later. That was a gain of nearly 1.30, but we lost almost 88 cents of that by this morning, Tuesday. The July 21 market is currently at 5.29-3⁄4, down three cents for the day.
Corn futures
Corn futures are very similar, whether it be the old crop September or the new crop December. The December remains a little higher than the September is the only real difference. The December gained almost 92 cents from the low of 3.62-1⁄2 on June 15 and 16, to the high of 4.54-1⁄4 on July 14. Since then it has been ugly, losing almost 39 cents.
Soybean futures
The soybeans actually broke before the corn futures, then went back up and made a double top. That actually makes a pretty firm ceiling on prices. The November futures put in a low of 8.95-3⁄4 back in the middle of June. The first of July we hit $10.40, then retraced by July 8 to 9.78-3⁄4. From there we made the high of 10.31-1⁄2 on June 13. Currently, November soybeans are trading 10.02-3⁄4, up three and a quarter.
December futures
When December corn futures got near $4.50, disciplined producers got some new crop corn sold. Others started talking about how far we could go — maybe we could see $5 this year after all!! Now farmers are back hoping to see $4.50 again, and worrying about moving the last of the old crop.
It is hard to be a poor-producing state in a good year. It remains to be seen if the crop will be fair or good, but we need to close our eyes and sell some on any real rally.
