Newsletter Archive

We hope everyone will have a safe and enjoyable Fourth of July. At the time of this writing, we are having no moisture shortage issues. What we do have is plenty of areas with excess moisture problems. Once again, the USDA Crop Report (June 10^th) labeled the markets friendly and called both corn and bean markets 10 to 15 higher. When the market opened, we traded those numbers for the first half hour, then it was back to pre-report values and business as usual.

As we continue to see a substantial amount of corn and beans put on Price Later, keep in mind that those bushels will have to be priced by September 15.^. Additionally, seasonal price moves continue to be the norm. Keeping that in mind, the five year average price of corn on the CBOT is $ 3.63 and the beans are $ 8.99 ¾ . Those would be substantially lower if we would take out the price spike of July 2008 (corn $7.50 & beans $16 plus). With continued talk of a big corn and bean crop and carryouts growing, you would think it is going to be tough to get much of a late summer rally, if any, barring any big move into grains by the funds. The dollar dropping has helped grains lately. Also helping is the announcement of additional Chinese business as they continue to import corn and beans from the U.S. China continues to buy in spite of the fact that they keep talking about how good their crop is. Granted, their crop and our crop here, is a long way from being in the bin, but the crop conditions reports continue to be much better than last year at this time. We still hear of bean acres that have yet to be planted in areas that have been too wet such as southern Iowa and northern Missouri. Canada has some areas that may not get planted (reports of 10 million acres) and that would be oil producing crops such as canola and rape seed. That leads us to believe those factors could potentially help the bean prices some.

With all the supply and demand talk U.S. and European economies, along with crop conditions, heavily influence market strength. Both economies have an effect on the dollar index, which in turn, has a big effect on grain prices and the crude oil price. We’ve seen $85 plus on crude oil since January and it has dropped to sub $70 and has worked back to the $75-$80 level. However, the same cannot be said for grains as corn has dropped from the $4.40 (CBOT July futures price) level in January to sub $3.40 in early June and back to $3.60 by mid June. The July beans have not fared much better as they were $10.50 to $10.75 in early January and have dropped to the $9.50 area by mid June.

As always, we cannot stress enough to check your bins weekly. Move any bin that you have any concern with the ability to maintain the quality of the grain. I was told a number of times by a coworker out west "Sample sour makes poor flour." Today, it should be said that "Rotten corn makes less ethanol." It’s not as catchy of a phrase, but still true. Just remember the crop is not made yet, but the likelihood of a big rally is slim, so holding Price Later bushels until September 15^th may not be the best idea.