Bulls are running
The market bulls are running in the grains, with new recent highs in corn going back to June 2009, with Dec corn nearing $4. The strength in corn is also being reflected in wheat and soybean markets, as both are running higher as well as the corn. Soybeans are back above $10 and threatening to run to new highs, while wheat is confirming higher highs and higher lows by running to new recent highs today. All of these things are positive technical signs for the market, and is confirming the idea that bottoms have been formed in grains for the 2009 season.
What is odd is that these lows have come before much grain has been harvested of corn and soybeans, an unusual situation but then again, we have an unusually bad harvest weather situation in 2009 thus far. Harvest progress is well behind normal, and based on October weather thus far, has been nothing but a disaster as far as harvest goes. Cloudy, cool, rainy weather has dominated the first 3 weeks of October, causing us to effectively lose 3 weeks of time in the 2009 harvest as very little has been accomplished. The few days of harvest that producers have had has knocked out essentially 17% of the corn and 30% of the soybeans, but this is far from normal progress efforts by Oct. 21. Typically 46% of the corn and 72% of the soybeans are harvested. It's likely we'll fall even further behind normal by next Monday, further implicating 2009 as one of the worst harvests on record.
The risk of loss is most evident on HRS wheat, where significant amounts of Canadian wheat are as of yet still unharvested. The quality of the remaining wheat is questionable, and its even going to be questionable whether some will be harvested at all! These potential harvest losses in quality and quantity are still being built into the market.
Soybeans also are at great risk, as most fields right now are high moisture soybeans and the ground is unable to support equipment in many areas. The worst weather would be a snowstorm now on unfrozen ground, with heavy snow providing a insulating factor for unfrozen, soggy soils. The snow would cause heavy losses of beans, and if late enough in the season might not melt again until next spring. If sloppy wet soils do not freeze, it will be unable to support combines for harvesting at all this fall. This would be a virtual disaster for soybean growers, and is the most bullish scenario for the soybean market. The best case scenario for farmers is freezing cold, sunny weather that would freeze the ground and allow drying of soybeans, allowing combines to move on frozen, muddy soils and harvest the remaining crop. But it can't include any snow or rain or any moisture, as that would prevent the already soggy beans from drying down to levels that would allow harvesting, and keep soils soggy/wet.
Corn also is threatened, although corn can stand in snow much better than soybeans, with many pods close to the ground and at risk of being covered by snow. Harvest losses in corn are much harder to come by, as most ears will hang on pretty tight to stalks. But even corn can see some harvest losses from standing in the fields too long, as soggy soils can allow tipping over of corn. Currently, many corn fields will not support combines, leaving another miserable corn harvest season ahead.