Quality, disease concerns in corn country
The grain markets had something for everyone this past week. The Nov. 2 and 3 sessions were propped up by fund buying coming back to the marketplace. The last half of the week was pressured to new lows by hedging for a good harvest week and weeke...
The grain markets had something for everyone this past week. The Nov. 2 and 3 sessions were propped up by fund buying coming back to the marketplace. The last half of the week was pressured to new lows by hedging for a good harvest week and weekend since farmers are willing to sell soybeans off of the combine.
The Goldman Roll started at the close Nov. 6 and will proceed for the next four trading sessions. They tend to do the roll on the closes. The trade was short on anticipation that the Goldman Roll would help push prices lower, especially in soybeans.
China is said to be using the current break to price former sales on basis. Soybean harvest is estimated to be 75 percent to 78 percent done. If so, then some of the hedge selling should start to abate the pressure on the futures.
Corn harvest is estimated to be 33 percent to 35 percent done. Corn actually did not perform as weak as it could have. December corn still managed a higher weekly close after having made a lower low earlier in the week and then staging a nice rally. However, corn contracts closed the week just faintly higher.
So a lower low and a higher close -- beware if the low of 359.25 comes out. It should allow for more slippage toward 345.
Farmers have been given the best window for getting some harvesting done. However, corn drydown is a slow process, and with demand for liquid propane for drying corn this year being so great, facilities are running out and having to transport liquid propane from long distances, as far away as Kansas City, Mo., into north-central Iowa and even into southern Minnesota.
This year's crop of corn may have issues with storing well. Corn going into the bins at 19 percent moisture may lead to problems come March when temperatures rise. Corn coming out still may be 19 percent moisture.
This year's crop also has issues with mold and disease. Add in light test weights, and this crop should disappear quicker than most years when it takes more of the product to meet the end results.
Clients north of Peoria, Ill., tell me that some of their corn just went black layer last week, with moisture running at 31 percent to 34 percent. The norm for this year's crop appears to be test weights at 50 to 55 pounds, with moisture running at 21 percent to 25 percent. So what does this all play out for prices next spring and early summer? Cheaper prices because of farmers having to move corn rather than waiting for the ethanol plants to bid for it? Poor basis levels? Time will tell.