Grain prices on the futures markets have rallied since the middle of the month. Corn futures are up over 33 cents, soybeans are up 23 cents just this morning. Beans have rallied nearly 90 cents since the November futures low of 8.261⁄4 on July 16.
This Tuesday morning, July 31, we have seen a recent high of 9.16 for November futures, and are still trading at 9.131⁄2. The big bounce this morning comes from the news that the U.S. and China will have trade talks this week.
It is hard to believe that there may be a quick resolution to this problem, but there is hope. The E.U. blinked last week, and indicated readiness, but did not a sign a deal, that trade tariffs could be eliminated, and that soybean purchases would increase.
Things could work
So far, after all the over-the-top rhetoric of some news commentators impugning the intelligence of President Trump, there are indications that his method of negotiation might work. His position is that he is not starting a trade war, but that we already lost it.
Farmers I talk to worry about lost revenue if this continues, but seem willing to support him as long as he eventually prevails. In addition to the bounce from trade hopes, grain prices are experiencing a little bit of mood change that can have a big effect at the bottom of a bear market.
Traders are ready to change sides, and they seem to be doing that. Blame it on weather that is not quite as good as it was, and on weather forecasts for hot and dry conditions in the first half of August.
A hot, dry August can do a lot of damage to the soybeans, as they need to set pods and fill in that time period. A market that has been very negative loves to find something positive to talk about.
This week, the talk from the farmers has been that some fields need a little rain, and some fields show water between the rows and have yellow beans. It just depends where the farm is.
Crop condition
The U.S. Department of Agriculture’s Crop Condition reports show Ohio losing a little ground, but the nation as a whole holding firm on crop condition.
Ohio corn was rated 72 percent good and excellent last week, but 71 percent this week. The nation was steady at a total of 72 for both weeks. Soybeans for the nation were steady at 70 percent, while the Ohio beans dipped three percent to 65 percent good and excellent. Last year at this time, the soybeans were at 59 percent, the corn at 61. So, a slip in condition for Ohio, maybe a slip for everybody else ahead on tougher weather.
Overall, however, we are still headed for a huge crop. The current rebound is a change to price, not a chance to shoot for the $4 corn moon. In the meantime, this market will live and die on those trade talks with China.
Even with the big crops, good China news means a huge rebound. Poor China news? I don’t want to think about it.
