Market Monitor

By Marlin Clark

Contra-seasonal rally

 

In the normal order of things, prices go down as we approach harvest. Not this year. Prices have rallied sharply in corn, beans, and wheat, and market watchers like me are stumbling around looking for a reason.

Last week we talked about surprises in the USDA Crop Production Report. Uncle Sugar says the corn and bean crops are even bigger than expected, but prices refused to go down. I gave as excuses for the market action the delayed harvest and frost worries. The frost worries were a little too late to be a concern.

So, what do we have for the last week? A little retracement, then back near the highs.

Rains continued until the end of the week, so harvest progress was slow. Thursday night had snow flurries in Cherry Valley, and two inches of snow in parts of Western PA. Sunday was beautiful, an example of why we like to live in Northeast Ohio. Monday through Wednesday are supposed to be similar, only warmer, so look for the bean harvest to go a long way toward catching up. That catch-up will be at the expense of the corn harvest, however.

Monday USDA released the current estimates of harvest progress, and it is ugly. The US has beans at 30 percent, up from 23 last week. That is way behind last year's 64 percent, and the normal 72 percent. Ohio is similar to the nation as a whole. We had 34 percent harvested, up from 28 percent, but less than half of last year's 77 percent. Last year was ahead of the normal 68 percent. Some Western Corn Belt states are even worse. Iowa posted 37 percent harvested against a normal 85 percent.

The US has corn 17 percent cut, up only four percent from last week. That lags last year's 28 percent and the average of 46 percent for the last five year. We are hugely behind. They show Ohio at only eight percent, up just two percent from the week before. Frankly, I wonder who could have done that two percent. Last year this time we were at 35 percent, a little above the average of 31. Some of the biggest-producing states are the worst. Illinois has an average of 68 percent harvested at this time, but came in at only 11. That was up five percent for the week.

The market will continue to focus on harvest progress, and maybe that will drive prices, but expect volatility. Recent moves have caused producers to put in targets which may be unrealistic once we get the huge crops in.

November soybeans made a low in early October at 8.85-1/2. Harvest delays pushed that to $10.13-1/4 in a little over a week. This week, on the 15^th, we retraced to 10.02-1/2, but we traded a high of 10.08-3/4 overnight Tuesday morning.

The December corn was near $3.00 in early September, but had hit 3.88-3/4 by last Wednesday, the 14^th. of October. That did not hold, as we retraced to 3.68-1/2 the next day, but the overnight this morning put in a new recent high of 3.89-1/2. It would appear that the delayed bean harvest market is becoming a delayed corn harvest market.

While this was going on, December wheat futures were putting in the bottom in Chicago. Wheat has been in steady decline since the first of June, when the December put in a 7.25-1/4 high. October 5^th we bottomed at 4.39-1/4, and we have rallied as high as 5.29 on the 14^th. Currently December Chicago wheat is at 5.18.

 

 

 

 

 

Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.