Mark's Market Talk

The 4^th of July is behind us so summer is half over and there may be combines running 10 short weeks from now. Most of our trade area has good looking crops. There are some dry areas to the west and wet areas to the south and east. Rainfall has been a story of the haves and have nots to this point in the season. If you travel west and north of Des Moines there are areas seeing almost record drought. I experienced that 3 different years in the 80’s so I know what they are going through. The USDA released their June reports last week and most of you have seen them, but I will give a quick recap on the acres report. Corn acres were estimated 1.1 million less acres than the average trade guess while bean acres were 1.5 million less than expected. This sent corn futures up the 40-cent limit while beans were almost 90 cents higher. For the week Dec corn was 58 cents higher while Nov beans were 1.28 higher. On the surface the report looked hugely bullish. However, when you add the numbers up it appears they are short about 3 million acres somewhere. I think the traders thought the same thing as prices backed off a little last Friday. Part of that may have been caused by the 3-day weekend. Three days without trading is a lifetime to commodity traders during the growing season so some may have cashed out Friday and will take a look at things again Tuesday. The corn market will be primarily weather driven through pollination. Once we have that answer the attention will return to supply and demand. There has been frost damage in South America that has trimmed their second crop corn, we just do not know how bad. The drought in this country has not improved very much either. About a third of corn and bean acres are in moderate or intense drought conditions. Beans have more time to rebound while some of the corn needs rain right away in order to produce a viable crop. The USDA is still using trend line yields of 179.5 and 50.5 in their supply reports. Any reduction in yield would tighten the ending stocks some more prompting higher prices. But, at some point those missing acres will appear, and we may find the private forecasters knew what they were talking about prior to last week’s report.