One of my marketing theories is that perception is reality. Especially at this time of year, the market's perception of how big the crop will be is more important that what is really going on in the fields.

For more than a month, it has been the perception of the market that the weather, in general, is good and that crops are developing normally. Therefore, prices dropped.

The perception now seems to be that prices have dropped far enough. Not every area has had ideal weather. The crop may not be as big as market watchers anticipate. Maybe it is time for prices to recover.

A study of history shows that in many years prices have improved in August. It is common to have a change in psychology as the market tries to weigh the potential for the crop to be smaller than anticipated against the discount bid into prices in the last six weeks. The long term seasonal soybean chart shows a definite rally eight of the last 12 years from about August 20 to September 12. There is no corresponding move on the long term corn chart. However, in looking at individual years, it is easy to spot instances of higher prices early in September than in the middle of August.

The odds of better prices in the next four weeks are good enough that I do not want to consider making any sales today or in the near future. Basis here in Eastern Nebraska has widened out enough that elevators obviously do not want to buy grain right now. They are content to clean out bins in anticipation of needing the space to store a big crop. Soybean basis especially is telling farmers to store this fall's production. The potential for a payoff through basis improvement is the best in history.

Conversation at this morning's breakfast meeting here in Plattsmouth focused on the potential for crop yields considering that there has been no significant rainfall since late May. We missed another chance for a good rain this week when it went west of Lincoln and hit areas that already had good yield prospects. Farmers are generally upbeat because most got good prices for last year's production. There will be some corn this year because the crop was able to draw from the moisture reserves built up in May. Experience in 2002 and other years when there was August rain indicates plenty of time for a good crop-if rain comes soon.

The "Marketing Talk" meeting on August 23 will be at an ideal time. By then we will know if the change in psychology I anticipate has brought about better prices. If so, there is plenty of time to make plans and sell those bushels that need to go to town at harvest. We should also be able to get a feel for yield prospect from other farmers. It will be a great event!

One of my marketing theories is that perception is reality. Especially at this time of year, the market's perception of how big the crop will be is more important that what is really going on in the fields.