Mark's Market Talk

Aug 02, 2022

Can you spell RALLY. Last week was one of the strongest weeks in the bean market ever. If you remember back 2 weeks, it was doom and gloom as the funds were exiting the futures market as fast as they could. The weather was moderating, and trend yields looked achievable. Then suddenly mother nature decided to throw some hot and dry at us and the markets responded all week. December corn ended the week 56 cents higher while November beans jumped 1.53 for the week. Suddenly we are headed back toward contract highs and the current forecasts show the 6 to 10 being extremely hot and very dry. Areas that thought their corn was made may see it go backwards this week. Areas that are short on moisture will feel the heat as the crop shrinks. The rain chances appear to be very slight while the daily highs look to be 10 to 15 degrees above normal. Old crop corn basis has increased as those with corn left in the bin have pretty much closed the door. Farmers by nature are greedy and most smell a windfall right now as we watch the new crop corn prospects shrivel. Bean basis levels are a mixed bag as the river market is actively seeking more beans, while the interior plants act like they have enough coverage to make it to new crop. There is no doubt that there is a lot of volatility left in these markets. If the forecast holds, we should work higher again this week. But, as soon as the weather starts to moderate, we may easily slip lower for several days. That means we must be looking forward as we digest these markets. Sometimes it gets too easy to get the backyard view and not watch other areas of the country. Right now, the target area for this hot and dry weather is large and the impact could be huge and push yields below trendline. But you still need a plan B in your pocket that will kick in should the weather get better. The one constant in all of this is the forecast will change at some point. Anticipating when that will happen and acting on it before everyone else figures it out will make you out to be an expert.