Stability will be bullish for grains
Financial markets have finally found some stability, holding between 8,400 and 9,200 on the DOW. Finally, we're seeing a stable force in the marketplace (if you consider 200-600 pts moves back and forth 'stability').
While markets are giving plenty of volatility in the markets, they also have not dropped sharply and continually as was the case a few weeks ago. That is becoming an important factor for grains, who have seen prices drop significantly over the past month.
Exports are starting to pick up in sales, and buyers who were in need of grains before the recent price break are taking advantage of the recent break and locking in nearby needs. That might end up being a great strategy, at least much better than buying it a month or two ago (or anytime this summer).
Yields of soybeans have been disappointing in the Western and Northern Corn Belts, where it seems the cool weather has caused yields to be less than expected. That could lead to another cut in soybean yields in future reports, but on the other hand, Central and Southern Corn Belt producers are finding a very good soybean crop. Will poor yields in northern areas be offset by good yields in southern states? If lack of heat was the force that lowered yields in the northern areas, perhaps the lack of heat in the south helped yields???
Corn yields so far are great almost everywhere, meaning yields might need to be hiked considerable more in corn than the 154 bu currently projected by USDA. In fact, many producers are astounded at how good the corn yield is and wonder, where did this yield come from? The strong corn yields seems to be coming due to a lack of stress throughout the year, especially lack of heat stress in almost all areas. No where is this more important than in the south, where corn crops are usually lost by heat (burning up late in the year) rather than any other problem. The cool August (temps in the 70's/80's) was perfect for corn in the southern Corn Belt/Delta, and allowed the corn to reach maturity (although behind normal pace) without the devastating heat that so often causes that crop to be lost. The Corn Belt also was nearly ideal in temperature, and the lack of frost in late developing northern areas was the perfect recipe to finish up the season. Given the large yields (much better than expected) almost across the entire country, its likely corn yields will approach or surpass the record high yield of 160 bu/acre by the time USDA finishes up their numbers in January. Overall, this is bearish corn and with the brunt of the harvest ahead, corn may continue to struggle with the large yields being harvested.
Late harvest could support the market if weather turns nasty (as it has in the Western Corn Belt), but Pro Ag is looking for corn to bottom at the 70-90% harvested area on a normal year with a better than expected yield. However, the financial crises we had early in the harvest did pressure corn prices to very low levels, so if we haven't make the harvest lows yet, we might be very close to the final low.