We finally got some rain here in Cass County. My gauge showed 1.85â€ at the home place.
Some farmers in eastern Nebraska got as much as nine inches. Many had two to five inches. I hope what we got will hold the crops through what is predicted to be the hottest week of the year next week. At a water use rate of a quarter inch per day, it should last seven days. I hope the heat does not last that long.
Last weekend, the crops were really showing the stress from lack of rain. There had been yellow spots in the corn for a long time. The beans were wilting and shorter than normal from the heat Saturday and Sunday. The corn is still yellow. Ears are short and not filled to the end. The precipitation will put test weight in those kernels that are still filling. The soybeans should set more pods and may actually grow a little now. The timing of the weather event should be ideal to get the most yield from a limited amount of water.
I am writing this before the August crop report that everyone is eagerly awaiting. By the time I produce my next column, the report and reaction to it will be history. I do not put much stock in this report anyway, so the timing may save me from saying something that would look stupid.
This is the time when there is not normally anything to do in the grain markets anyway. The corn market is usually in a trading range, as it seems to be now. The soybean market usually has a minor rally going into the September crop report. There is plenty of time for that to materialize. The long term seasonal chart shows that move starting around August 20.
I like to look at other commodities to try to get a perspective on how the grains are fairing in the whole scheme of things. My focus for the last two weeks has been on the Canadian dollar. I have been doing research for a meeting I will be speaking at in Ontario. The currency exchange rate is a big problem for farmers in Canada.
When looking at exchange rates, the US dollar is indexed against a package of foreign currencies representing industrialized countries around the world. The Canadian dollar is compared to the US dollar. For several years, the US dollar was exceptionally strong. It made our grains very expensive in world markets. That means our prices had to be low to compete. This was the time when we feared that we could not compete with South America in grain production. In February 2002, the Canadian dollar was worth roughly two thirds of a US dollar. The price of soybeans at my local elevator was $3.95. The price at a country elevator in Ontario was $6.66.
Since 2002, the value of the US dollar has dropped by about one third. The Canadian dollar is now worth approximately 95% of a US dollar. As our dollar dropped and their dollar increased, our production became more competitive in the world market and theirs became less. On August 1 of this year, beans at my local elevator were $7.08. At the same elevator in Ontario the price was $7.59. Between February 2002 and August 2007, the price of US beans went up $2.20 more than Canadian beans.