In 34 years of farming, it has never ceased to amaze me how quickly fortunes can change. It is not just the price of grain that many times makes a quick reversal. Weather also seems to never change gradually. Here in Cass County, Nebraska we experienced the second wettest May in history. The only reason it was not the wettest is that there was one big rain the last week of April. If it had been a few days later, May would have broken the rainfall record by a big margin.
June ends at midnight Saturday. Unless some unexpected weather event happens, June will go down as the driest in history. We had only a fraction of an inch and that came in the early morning hours June 1. I am fortunate to farm in an area where the soil is well drained and permeable, so even with the extremes crops look pretty good.
My theory that the weather never changes gradually is frustrating under todayâ€™s circumstances. Wednesday a front went through. Temperatures cooled nicely.
There was some rainfall as it passed central Nebraska. The front stalled south of me and rain developed. Rain fell over the Nebraska Kansas border for several hours. Some locations got as much as five inches. Here we sit, high and dry, while neighbors to the south suffer from the excess.
Just as frustrating is the reaction of the market to weather events. While we were getting good rains in May, the corn market was in a steep rally. As we got drier and drier, the corn price plummeted. So much for logic in the grain markets! Judging crop conditions from a single location is an exercise in frustration.
As I mentioned last week, there is a good chance that the high of June 18 will prove to be the yearly high in December corn futures. After the drop of around 75 cents since then, there is a very high probability of at least a fifty percent retracement. That will be my signal to finish up sales for the summer. What is not sold by then will be stored into next year.
There are reasons for optimism in the near future. I delivered corn this week that was sold June 7. I was the only farmer hauling into that particular elevator. There is almost no grain being moved. Basis is still very good. It is a few cents lower than at the highs of last week, but still better then it had been for most of the last few years. We probably have seen this summers highs, but it is too early to give up completely.
This morning's crop report leaves me with a lot of questions. Was the price rally in December corn futures of 65 cents from late May to June 18 too much for the growing conditions? I was in Illinois during that time and the crop situation was not good! Was the drop of 75 cents from June 18 through yesterday sufficient to compensate for the big acreage? We still have three months of growing season stress to get past. There is also the possibility that lower prices will stimulate demand. Action the next couple of days will tell if prices are headed back to levels of a year ago or if this shock was already bid into the market. The soybean market will be equally interesting to watch as traders try to sort out how to stretch the bushels coming from the reduced acres.