Last week one of our advisers made a remark that sums up the recent peak in grain prices. He said that this was the wettest drought he had ever seen! The best reason given for rising prices was that the weather forecast was for continued dry weather.
Anticipation is everything in this game, so prices made another move on the Chicago Board of Trade. What we didn’t see was dry weather.
So, prices crashed Monday, June 20, with the weight of rainy forecasts and crop condition reports from USDA. We were now reported at a continued 75 percent good and excellent, although the market had anticipated a two percent drop in condition.
Soybean ratings did decline one percent, but the trade had anticipated one to two percent. July corn ended the day down more than 16 cents, at $4.311⁄4. The losses continued into this Tuesday morning, June 21.
Downward trend
We are down more than a dime in early trading, at $4.103⁄4. This comes after six highs above $4.353⁄4, with the contract high at $4.391⁄4 on June 8.
The December corn futures were a similar disappointment. We made a high on June 17 at $4.49, then lost 15 cents on the 20th to a close at $4.333⁄4.
This morning, Tuesday, we are down an additional 11 cents at $4.223⁄4. July soybean futures are similar, but not the same. There the high came a few days earlier, but we have had a similar break in prices.
The high was at $11.861⁄4 on June 13, but this morning we are at $11.20, down nearly 13 cents on the day. We have now had eight sessions of mostly lower prices. So, call this a weather market, where the weather never caught up to the market.
That makes some sense, except for the current weather maps. It is hard to see how we get rainy conditions and normal heat when we can turn on the national news and see that the west is burning up with triple-digit temperatures.
Moving east
The forecasters on TV tell us that the heat is moving east, so we are left with the idea that it will either not reach us in the Corn Belt, or that one group of forecasters is wrong.
What if they gave a drought and nobody came? Or, in this case, what if they gave a drought, but it was late getting here? I say this to caution the reader that I am strong on history but weak on opinion right now.
Yes, we just saw the top of the market. We have made a big break, and the smart thing to do is to sell some grain. On the other hand, if the heat in the west keeps coming, we will make another, newer high.
The Plains
Heat moving east gets us thinking about the Plains. The high Plains are going to see heat today. For the bulk of the Plains, the wheat crop is mature, and heat helps harvest, although it makes it no fun.
I don’t follow the Kansas City markets much, but the Chicago wheat market put in a new contract high on the 8th of June, then slumped to today’s $4.683⁄4, down four-and-a-quarter cents for the day so far.
Setting in
This is a market that is getting comfortable with condition and crop size. Locally, farmers have been finishing nitrogen side-dressing and making hay. They are grateful for dry weather that has helped field work, but they are also grateful for little spurts of rain.
We are too dry, but with crops that right now are in great shape. We are a little behind the growth we would like to see because of weather that has, until the last week or so, been too cool.
A little heat would be nice, as long as it is not too hot. The rain that is forecast is a must.
