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Rain makes beans

Agriculture.com Staff 09/01/2006 @ 1:07pm

This morning, I had breakfast with my good friend who keeps meticulous weather records. He informed me that we had eight inches of rain in August.

Actually, he got slightly less at his farm than I did at mine. I think my total was more like eight and a half. A neighbor further west said he had over nine inches. That is the good news. The bad news is that we are still behind for the year. June and July were abnormally dry.

The rain came too late for the corn. We will have a good crop, but nothing like the 1994 production. Ears are tipped back and spots in some of the fields died early.

Soybeans are another story. They are still filling, but in general the plants are normal height with lots of pods. Farmers, at the meeting this morning, expressed the feeling that there are more than the normal number of one and two beans pods. I know from experience that trying to estimate soybeans yields even this late in the season is a guess at best. There is no question in my mind that yields will be good.

The frustrating thing right now is that the upcoming time between September 12 and October 4 is usually the period when soybean prices drop the fastest. Fifteen years out of the last 17 years prices have dropped between these dates. Seasonal charts show prices going up prior to September 11. That certainly hasn't happened this year. Futures prices dropped 46 cents in August when they normally go higher. This does not paint a pretty picture for the immediate future.

I never recommend forward pricing grain below the loan rate. It is a risky strategy to take such a low price because if prices go up before harvest, you might lock in a low price and then not get an LDP. If you are prone to speculate, however, being short beans during the last 20 days of September has good odds of being a profitable trade.

The other side of this situation is that basis levels are holding together pretty well. Here in Eastern Nebraska we have not seen the basis improvement that others talk about. However, we have not seen the soybean basis slip toward a negative dollar a bushel that merchandisers were predicting early in the summer either.

All of my old crop grain is gone and the bins are empty. My focus for the next few weeks will be to put all of the new crop grain away and wait for better basis. Of course, I will also be evaluating LDP opportunities and looking at December to July spreads to find opportunities there.

This morning, I had breakfast with my good friend who keeps meticulous weather records. He informed me that we had eight inches of rain in August.

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