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Why did God make analysts?

07/19/2013 @ 5:17pm

With the price and weather extremes this year I find it difficult to say something concrete that will not sound silly by the time of the next big market move. Long-term seasonal charts show July to traditionally be a time of downward movement in grain prices except for wheat. The tightness of old-crop supplies of soybeans and corn makes for more excitement than normal in the cash market. Poor planting weather followed now by lack of rain is keeping new-crop bids from falling out of bed completely.

One of the standing jokes around my house is that it is possible to predict weather by looking at the direction of grain prices. On days when prices drop, it must mean that there will be rain in the near future. If prices move sharply higher, it must mean that the drought will continue. I cannot quote any scientific evidence that such predictions are true. Nonetheless, for anyone with experience, the markets surely seem to work that way. There is an old riddle that fits the current market situation: Why did God make market analysts? The answer: To make weather forecasters look smart. These principles are relevant to today’s markets and weather.

An activity that I have used as an excuse to stay in the air conditioning on these hot afternoons has been to search Sharon’s diary to see just exactly what the moisture conditions are at my farm. I began by looking at rainfall totals since I finished planting soybeans on May 25. From that date until today, my gauge measured 8.75 inches. 

The bad news is that there have been only two rains of .25 inch each since June 15. I have calculated that at .25 inch per day of crop use, we are just about out of reserves. The crops still look good. Early planted corn is just about to full silking stage. Soybeans are knee-high and still growing. I guess that traders in Chicago are basing price outlook on windshield surveys, not rainfall records.

I sometimes judge moisture conditions by the appearance of my lawn. Today the Kentucky bluegrass is brown and dormant. The bromegrass and fescue are still green but no longer growing. Bluestem and Indian grass still look good. From the appearance of these grasses, it appears that moisture concerns are taking their toll but have not reached crisis conditions yet for crops in the field.

One of the benefits of having a lot of rain followed by cool weather is that the hay production on the 10 acres of small fields around my buildings was extremely good this year. The bromegrass was shoulder-high when it was cut earlier this month. The quality is excellent. It was mowed and baled with no rain while in the windrow. Maybe the record production in eastern Nebraska will ease some of the problem of having short forage supplies further west.

One recent discussion thread in Agriculture.com dealt with the issue of retirement and farm succession. That is a topic that is near and dear to my heart every year about this time. In Nebraska, farm leases run from September 1 through August 31. Any lease that is not legally terminated is automatically renewed. 

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Rain Drains Grain Markets