Home / Markets / Markets Analysis / Soybeans market / Weather, weather, weather-Ray Grabanski

Weather, weather, weather-Ray Grabanski

Ray Grabanski 07/20/2011 @ 2:55pm President, Progressive Ag www.progressiveag.com

The market now is dictated by three main items:  Weather, weather, and weather! 

After all, it's July and the heat dome of doom has set itself up in the central Corn Belt where it is providing heat to nearly the entire US growing area.  While that is of some concern, it also is accompanied by a forecast that allows some showers and rainstorms to continue to come across the US, which provides a little different  scenario than "hot and dry". Instead, it's "hot and wet" for a good share of the northern Plains and eastern Corn Belt, which should be a better weather pattern for their growers in the coming months.  

We don't seem to have as much experience with warm and wet weather patterns, as typically they don't go together for an extended period of time.  It also is an unusual year, in that the planting progress was slow. So, the crop is behind normal development and in need of a certain amount of heat to help it make maturity before a frost.  So at the onset of this wet, soggy year as it started this spring, warm weather for a period of time will be mostly beneficial to a point.

For example, the Pro Ag yield model for corn rose to its highest level in 2011 on the Monday, July 18 crop progress report, with it rising to 160.6 bu/acre vs. the current USDA projection of 158.7.  Actually, the yield potential expanded last week at the onset of the heat!  

But there seems to be more agreement that this week's heat is starting to do some damage, as the crop is starting to tassel and hit the reproductive stage of development.  That turns the tide a bit, as during pollination a lot of bad things can occur with excessive heat.  While the bulls have the market firmly in their grasp today with runs near yearly highs in corn, this summer isn't over yet, either.  The weather pattern can change in a heartbeat, and when/if it does a whole lot of weather 

premium will need to come back out of the market. 

So, the real question is how long the heat will last, and how much damage to the crop yield potential will occur from the record heat currently experienced across the Corn Belt? And will it abate quickly, essentially leaving us with just another week of warm weather to help the maturity of the crop?

These are some of the questions that has to be on the minds of nearly every trader, farmer, grain handler, and brokerage house's mind lately.  

CancelPost Comment

South America's Crop Output a Leading… By: 02/09/2016 @ 9:57am The USDA February report, (usually not a very important one), will be watched for its updates of…

Buy Grain Since the Market Is Dead, Analyst… By: 02/02/2016 @ 12:31pm Not much news in the grain markets recently. We have likely bottomed, and prices will likely do…

A Dead Market Isn't So Bad, Analyst By: 01/26/2016 @ 11:26am The grain market is dead! We killed it when we produced back-to-back record crops of corn and…

This container should display a .swf file. If not, you may need to upgrade your Flash player.
Ageless Iron TV: Tractors at War