Where's the summer? First, we have a cool wet spring and now, a cooler than normal summer. Temperatures for much of the Midwest are running some 15 to 20 degrees below normal. In fact, new record lows were recorded this past week in Iowa, lows that have not been exceeded since 1882.
The corn crop west of the Mississippi River is into tassel -- pollination stages -- and the cool temperatures have slowed the process, but all said, condition along with weekly rains couldn't be better.
Even east of the Mississippi, producers are amazed as to how nicely the crop is coming along. Because of late plantings, pollination will be strung out for a few more weeks, but this year's crop has the potential to set a record or the second-highest in history. In the last U.S. Department of Agriculture supply and demand report, USDA left bushels per acre for corn the same. Once pollination is made, the trade assumes that 90 percent of the yield is set, and I suspect a bearish mode sets in motion again.
Premature optimism
Producers got too optimistic again this early summer and did not sell enough old crop corn. Much to their amazement, prices fell hard along with the harvest decline for wheat prices. Producers locked up their bin doors and have refused to sell corn. Coincidently, ocean freight fell to new recent lows and has spurred interest by commercials. Corn is moving into elevators, as grain haulers tell me that they were not busy May and June and early July, but now has shown interest. Now, if the producer is shipping corn to the elevator with free storage until harvest, then producers need to be aware that the grain still is going to make it into the commercial hands. However, if so, producers also need to be watchful of basis as the closer to mid-August we get, the softer the basis may get. In some eastern processing plants, bids for corn was running 35 to 50 cents over board. Just don't let yourself get into two crops together. Normally, farmers don't tend to win at this game.
ADVERTISEMENT
Rumors of an increase in the ethanol mandate to 15 percent being supported by Midwest governors also may have put some support under the futures July 17. Still, though I'm normally optimistic, it is hard for me to feel that the lows are in. Seasonally, corn and soybeans tend to become choppy for a few weeks before resuming the trend to new lows. Another chance to sell some rallies?
