Exciting, confusing weekend hits grain trade

Timing is not everything in this business, but sometimes it feels that way.

Currently, we are working through some major price revisions on the Chicago Board of Trade. They come as the USDA reports surprised us Friday afternoon, and as we deal with a shortened trading day Monday and a holiday Tuesday, July Fourth.

Attitude adjustments happen once in a while with trading on the Chicago Board of Trade, but it gets confusing when those attitude adjustments are worked out in shortened trading.

Planting update

Friday afternoon USDA gave us new numbers to chew through with the Planted Acres estimate and the June 1 Grain Stocks report. This Monday morning, we are looking at a shortened day, with trading stopping at 12:05 CST. Then, there is no trading again until the 8:30 CST re-open on Wednesday morning.

This starting and stopping acerbates what amounted to a surprise Friday afternoon.

Traders were focused on the first USDA try at planted acres. The numbers pegged planted corn at 90.886 million acres and soybeans at 89.513 million. The soybeans were just below expectations, but the corn was significantly above. The trade average guess was for 89.903 million acres of corn and 89.750 acres of beans.

Ahead of the report there were some traders who thought we might actually plant more acres of beans than of corn for the first time since 1983. We were not far off that.

Reaction

The results of the report were somewhat surprising, though. With more corn and less beans, shouldn’t corn prices have slumped and beans improved? Not actually. Even with higher acres, corn prices were up. The beans were up as a reaction of lower acres.

December corn futures had put in the new low at 3.74 Friday, June 23, then traded back above that. On Friday, June 30, we saw a range of 3.80 to 3.93 3/4, and we closed up 12 cents after the report.

The soybean futures had made a low also July 23 at 9.07 on the November contract. Friday, June 30, we traded from 9.21 1/2 to 958, and we closed up 30 cents at 9.54 3/4.

Monday morning we are seeing follow-through in all three commodities. December corn futures are up eight cents, at 4.00. November soybean futures are up 19 1/4 cents at 9.74.

Corn and beans are up even though the weather forecast is for hot and dry, which should be an improvement to the crop right now.

What about wheat?

Chicago wheat futures are soaring in sympathy to the spring wheat crop which is officially a disaster. Spring wheat seedings came in at 10.9 million acres, down from the 11.2 expected, and well off last year’s 11.6 million.

In addition, the condition ratings are horrible. South Dakota was actually much of the reason corn acres were higher than expected, as farmers there increased acres by 400 million.

On July 26, Chicago September wheat futures hit a low of 4.63 1/2. Last Thursday, July 29, they traded 4.67 3/4 to 4.75 and closed four higher. Friday they gained 30 cents. This Monday morning they are up another 15.

It is hard to say what effect the wheat rally is having on the corn and beans, but all are bullish for the moment. Only wheat futures, however, have broken out to a new range.