Mark's Market Talk

Jun 19, 2023

Weather has been the hot topic for most of the past month. This past week it took center stage as the major weather services actually agreed for a change as their 6 to10 day forecasts were all hot and dry. This got the markets excited mid-week and on Friday it continued to churn higher even with a 3-day weekend looming. That showed the trade is buying into the high possibility of reduced yields, not only on corn but also beans. The drought maps show more areas of short moisture each week. Sale barns in northern Missouri are starting to advertise drought sales as many area pastures are drying up. Normally you see this in August, not June. Traveling to northeast Iowa this past week I saw few great crops. Most areas were showing stress. As we went further north and east, we saw a lot of areas that were wet early this spring which delayed their planting. Once the rain quit it stayed dry so many of their crops are showing severe stress. This was an area of record yields a year ago and now it appears they will give some of this back with this crop. The board has moved higher in both old and new crop months. Those with old crop bushels are being given a second chance to price at higher prices. However, as is normally the case, the terminals are slashing their basis levels and keeping part of this increase for themselves. The question is can they buy enough bushels to keep things going till fall. Already some producers are talking about holding the old bushels they have until they know they will produce a crop this year. If instead of the record record corn and bean yields the USDA was predicting we come up 5 or 10 percent below trend yields, it will get very interesting. Current forecasts do not show widespread rain in the next 10 days. The area of concern has grown weekly and now shows possible crop trouble in almost all major grain growing states. The large second corn crop in Brazil will provide some short time relief for world corn supplies, but a short US corn crop will affect world prices. Perhaps the higher prices we have enjoyed in the past 2 yields will remain for another year. Of course, you will need some rain to raise this crop in order to capture some of the higher prices. And that is one input we cannot apply ourselves unless you have irrigation equipment, which we do not in this area. In the meantime, keep doing your rain dances.