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Rain again

Agriculture.com Staff 06/27/2008 @ 2:16pm

This week's heavy rains, especially in Iowa again, kept the markets active, pushing prices into new highs for corn and soybeans on growing concerns of declining crop potential.

While we do not disagree that many farmers have suffered disastrous consequences from too much moisture, we are cautious to promote the idea that this year's crops are disastrous as a whole. What's damaged is damaged. However, we have also talked to many farmers who could actually use or have benefited from this week's rain.

Typically, rain in late June is beneficial to larger crop potential. For now, though, the market is focusing its attention on increasing odds of a declining crop, mainly due to poor conditions in Iowa and Illinois. Southern Wisconsin, Indiana and Ohio all share in major concerns as well. Northern Missouri, parts of Nebraska and South Dakota have also struggled. Another factor supporting price is up-trending energy prices.

Our bias is that the market has factored in weather concerns for now. In order for prices to advance much further, the crops will need to experience additional fundamental concerns. For much of the Midwest, rain in late June is probably viewed as a good problem. While it is devastating for those who have been flooded, it also will help most crops into mid-July and maybe beyond before dry weather may become a factor.

So in the end, the recent recovery in prices late this week would suggest the market is concerned with lower acreage and yield potential. Producers of corn and soybeans should view any rally from this point onward as opportunity to either roll PUTS to higher strike prices or buy PUTS against expected production you are not intending to forward cash sell. If light on sales, then consider additional cash sales.

If you have questions or comments, contact Bryan Doherty at Top Farmer at 1-800-TOP-FARM ext. 129.

This week's heavy rains, especially in Iowa again, kept the markets active, pushing prices into new highs for corn and soybeans on growing concerns of declining crop potential.

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