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Bulls and Bears Are in a Weather Tug-of-War

Minneapolis wheat had a huge 94¢ trading range yesterday in September, which is enough movement from high to low to indicate a potential top in that market. However, it seems a bit early to do so, especially with corn and soybeans hardly participating in the rally yet at all. Today we have negative price movement in all grains, though, and that could be troubling for the market bulls.  

Rain is falling in eastern North Dakota and western and northern Minnesota today after developing overnight. There also is rain falling in the eastern Corn Belt including southern Illinois/Indiana/Ohio, parts of Kentucky, Arkansas, and Tennessee, as well as scattered rain elsewhere. The seven-day forecast calls for above-normal precipitation in the eastern Corn Belt (Wisconsin, Illinois, Indiana, Ohio, and Pennsylvania) today. Temperatures are forecast below normal in the eastern Corn Belt the next seven days  but above normal in the western Corn Belt and in the western U.S. — the same pattern for the past few weeks. 

The eight- to 14-day forecast turned back to drier this morning in the entire Corn Belt, with the southeast U.S. the only area to see significant rainfall. Temperatures will be above normal in the western two thirds of the Corn Belt and normal in the eastern third.      

We hit our target of $7.99 Minneapolis wheat to price an additional 25% of old-crop wheat and also the target of $8.12 September Minneapolis wheat to price an additional 25% of new-crop wheat Monday. HRS wheat sales are now profitable for most producers, so it might not be a bad idea to reward the market with some sales. If this is the market top, we will wish we had made even more sales (and will have to sell the rest of old crop on the way down).     

Corn is in retreat today, but if we can rally close to the Monday highs, we will need to start making sales again. We neared the old highs for corn at $4.09 December Monday (high of $4.07), so this is a good place to dip our toes into the water with some corn sales. If September corn rallies to $3.99, let’s make a 10% sale, and if December rallies back up to $4.065, let’s make another 10% sale. 

Crop conditions yesterday indicated a 1% rise in corn conditions to 68% G/E, a 2% decline in soybeans to 64% G/E, and a 3% decline in HRS wheat conditions to 37% G/E. Winter wheat declined 1% to 48% G/E. The Pro Ag yield models rose 1.24 bushels per acre in corn to 166.8 bushels, down 0.2 bushel per acre in winter wheat to 50.1 bushels per acre, and mostly steady in soybeans at 46.55 bushels per acre. It is worth noting that all crops are showing conditions well below last year at this time.  

Corn silking is 3% behind normal at 10%, with 18% of soybeans blooming (1% ahead of normal). Cotton conditions dropped 3% to 54% G/E, now below last year’s 56% rating. Winter wheat is 53% harvested, down 1% from normal. Barley conditions dropped a large 8% to 52% rated G/E, well below last year’s 75% rating. Sorghum ratings dropped 3% to 62% rated G/E, well below last year’s 69% rating. Oats dropped 1% to 53% rated G/E, down from 67% last year at this time.  

Topsoil moisture ratings were down 1% to 68% adequate/surplus, with subsoil down 2% to 73% rated adequate/surplus. Overall, moisture levels for soils are rated nearly equal to last year, but the crop ratings are much lower for nearly all crops due to a poor start to the year (cool and wet during planting). It remains to be seen what eventually becomes of this crop, but currently all crops appear to have mostly below-normal yield potential. However, the season is only about half done, so there is a lot of weather left to be traded.  

Ray Grabanski is president of Progressive Ag Marketing, Inc., the top-ranked marketing firm in the country the past eight years. See http://www.progressiveag.com for rankings.

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