Home / Markets / Markets Analysis / Weather pattern change

Weather pattern change

Agriculture.com Staff 11/12/2009 @ 7:03am

Weather patterns have finally allowed warming/drying of late season crops and soils, allowing harvest to finally accelerate to a point where some harvest can actually be accomplished. But it is November, not October, so the amount of drying that takes place is slow and a struggle. Soybean harvest advanced to 75% complete (up 24%) vs. 92% average, and with another good week this week should approach 90% by next Monday as combines concentrate on finishing soybeans.

Corn harvest is a little further behind, with only 37% harvested vs. a normal of 82%, still well behind normal. The crop is still very wet in many areas, and harvest is being delayed as the crop dries down from high moisture levels. The high moisture level of the crop along with the late harvest progress to date indicates some corn will be left to harvest this winter.

Experienced 'snow corn harvesters' are busy planning to leave the outside 2-4 rows of corn as a 'snow fence', and harvesting the next 20-40 rows to allow the snow to blow in just in the harvested area. That allows combines to harvest almost all the corn in the field with little to no harvest loss once snow blows across the field, landing in harvested rows. Its likely we are going to have corn left unharvested until well into winter, so the skills of harvesting corn with snow in mind could come in handy for many producers. Some corn could be harvested as late as February or March (allowing the soggiest corn to finally dry out to harvestable levels). This is quite a year, and the market is still uncomfortable with the lateness of this harvest, rallying corn nicely so far this week after a slightly friendly gov't report. Our experience is that the corn will be harvested, as corn is more capable of standing in snow than soybeans (which cannot take snow well at all).

Funds seem intent on buying corn as they watch crude oil rally along with gold futures, putting back on their inflation hedge in commodities. Corn is the favored child for now in grains, with soybeans less favored with the rapid harvest progress the past 2 weeks. We've pushed corn prices back up near highs, with new crop 2010 corn and 2011 corn now at or above the $4.50 mark.

Can anyone make money at $4.50 corn??? If so, we have a chance to hedge some of it in Dec2010 at $4.47 today, and $4.57 for Dec2011. These seem like profitable levels today, with fertilizer prices coming down significantly from highs a year or so ago. Corn is perhaps the best sale of all crops, as the soybean/corn price ratio is still less than 2.3 for both years ($9.85 Nov10 soybeans/$4.44Dec10 corn is 2.22. $9.86 Nov11 soybeans/$4.57 Dec11 corn is 2.15). These ratios favor planting corn, so the right crop to sell for now is still 2010 and 2011 corn instead of soybeans. Pro Ag notes that 2011 corn ran to new highs this week, unusual for a bull market to be led by the far out months. Does the market know something about inflation that we don't readily see? Or is this a hedging opportunity too good to pass up?

CancelPost Comment
MORE FROM AGRICULTURE.COM STAFF more +

Farm and ranch risk management resources By: 07/07/2010 @ 9:10am Government resources USDA Risk Management Agency Download free insurance program and…

Major types of crop insurance policies By: 07/07/2010 @ 9:10am Crop insurance for major field crops comes in two types: yield-based coverage that pays an…

Marketing 101 - Are options the right tool… By: 07/07/2010 @ 9:10am "If you are looking for a low risk way to protect yourself against prices moving either higher or…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Are We In a Climate Change?