Analyst eyes harvest market psychology
There was a lot to watch this week on the Smith farm, as well as in the grain markets. There was finally a rain of almost an inch on Wednesday. The corn crop is too close to maturity to benefit from the moisture. At one time, I would have said the same for the soybeans. However, in the years 2002 and 2003, rainfall even after the plants had started to turn yellow increased the size of the beans. Consequently, the late rain also improved the yields. I hope for the same to be the case in 2013.
The day of the rain, I planted a sample of tillage radishes that I picked up at Commodity Classic last winter. With all of the hype about the benefits of cover crops, I thought it was worth the time and trouble to try .10 of an acre on my farm. The rainfall should be enough to germinate the seed and get the cover crop growing.
The other project this week was taking stalk samples for residual nitrogen tests as a part of my CSP enrollment. Nitrogen management is increasingly important for grain farmers. My challenge in the CSP program is to use innovative practices to get more grain with fewer pounds of nitrogen. With three years of experience using nitrogen stabilizer and residual N tests, I feel I have not learned much so far. Maybe this year’s results will prove that what I have been doing really is working. I really hope so. Walking cornfields at this time of year is no fun!
Of course, the big thing this week was the release of the government report on Thursday. There was one unique thing about the report this year: Most farmers and analysts I talked to thought that the corn numbers would be negative to the markets and that the soybean numbers would be positive. In fact, that is precisely what happened. Very rarely do those in the industry guess the results of government reports correctly.
Reaction to the corn numbers was negative. Corn futures and cash corn bids had two down days at the end of the week. Initial reaction to the soybean numbers was very positive on Thursday but less so on Friday. Price action in the soybean market will be very important next week. The psychology of the markets sometimes produced a reaction exactly opposite of what seems logical.