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The next question for the market to answer is, “Will support for the September USDA report be weak?” ”
So far, this is the case, as the market has seen an upward reversal after the September 10 report and has recovered well for corn and soybeans, although the report is quite bearish, at the same time. both for US and global figures.
However, after rebounding for about a week after the bearish report, the market is now faltering. Typically, the market seems to have trapped anyone who sold a bearish report and punished them for a week until they most likely liquidated their short positions. This sets the stage for a sharp fall in the market… if we break that support.
The weather forecast continues to call for above normal temperatures and below normal precipitation for the next two weeks. There is some rain in Missouri and Illinois today, but only light rain elsewhere in the eastern Corn Belt. Essentially this is going to lead to a rather quick harvest as we move into the traditional harvest.
We switched to a more aggressive grain sale a week after the report, skeptical that the rally after the report was anything more than a bear trap. So far, this seems to have been a very wise move. Pro Ag has sold three to four crop years in the past 12 months thanks to the wisdom of knowing that after six years of bad prices, selling low was no longer a good alternative. In fact, there was virtually no risk of stockpiling futures contracts of $ 3.10 on corn and $ 8 on soybeans. This patience paid off immensely for the two to three years of harvesting in our bins or possessed on paper.
Twitter had fun with this idea during the pandemic, but we liked it when we deposited our profits in the bank last year!
Will it be wise now to sell corn at $ 5, soybeans at $ 12.50 and HRS wheat at $ 7.90 for 2022? We have something to protect here from the $ 3 corn, $ 8 soybeans, and $ 4 wheat that everyone fell on top of each other to sell during the pandemic and the trade war. There were a lot of marketing consultants who recommended it. We just couldn’t see where this wisdom was coming from!
Harvest conditions published yesterday showed improvements of 1% for corn and soybeans, 59% corn rated G / E and soybeans 58%. Pro Ag yield models rose 0.76 bushels to 178.4 bushels of corn (from 176.3 bushels USDA) and fell 0.05 bushels to 49.3 bushels of soybeans (but we lost the campaign agricultural 1988 in the odds).
Thus, it seems that the conditions of corn and soybeans increase during harvest, usually a sign that the harvests are better than expected. With little risk of frost this year while the crops are advanced (+ 4% ahead of dented corn, + 10% mature; soybeans + 10% falling leaves), the harvest will probably continue to improve until normal frost dates. This means that the prices are bound to go down as we harvest this crop. And, 10% of the corn is already harvested and 6% soybeans, so it’s going to move forward quickly in the coming weeks.
This will cause problems for the corn and soybean markets as if we fall below the upside reversal formed on September’s bearish report day, both are likely to suffer larger losses.
It should be noted that sorghum is also advanced (+ 5% mature), with much better conditions than last year (56% noted G / E against 51% last year). The sugar beets are harvested at 12%, with a good situation for harvesting with more moisture now in the soil, which makes it easier to lift the beets from the ground. Winter wheat is planted at 21% (3% ahead of normal) and 3% in emergence (1% ahead).
Pasture and range condition is 24% G / E, down 1% and slightly lower than last year’s 27% rating.
Soil moisture is 50% sufficient for excess topsoil (-1% this week), but still slightly lower than last year’s 58% rating. The basement is rated 48% as adequate / surplus, -1% this week and lower than the 57% rating last year. The soil moisture problem is still in the northwest, but it has improved significantly since August 20. In fact, the outlook for the 2022 crops has also improved in the northwestern Corn Belt with the onset of the fall rains. Dry weather is also depleting soil moisture reserves across the country, but nobody cares because it also helps the harvest.
All in all, this has been a fun hike for the past 12-15 months; the market has made great strides in helping us forget the $ 3 corn, the $ 8 soybeans, and the $ 4 wheat. Yet these market lows are still on the charts and, because of this, are always on hand for almost any 12-month period (just as corn at $ 7.70 was within 12-month range in May. last when prices were $ 3). Markets fluctuate over time, and we must remember that we are just humans, not gods.
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Saturday morning webinar
Watch our Saturday webinar at 7:00 a.m. at www.progressiveag.com/videos. This week: we explain the 2022 and future crop prices, and the best way to do it.
Ray can be contacted at raygrabanski@progressiveag.com.
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Ray is President of Progressive Ag Marketing, Inc., one of the nation’s top marketing companies. See http://www.progressiveag.com for rankings and a link to data from Top Producer Magazine and Agweb.com.
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