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Crop yield varies, sending market mixed signals

Corn bean market graphic

The calendar and the weather forecast are the driving forces pushing crop prices right now, according to Don Roose, president of U.S. Commodities in West Des Moines.

This is the time of year when the market tends to decide whether the crop is getting smaller or bigger and it moves accordingly. The challenge this year is that the crop is clearly getting smaller in some areas but it is also getting bigger in other areas.

“It’s a mixed situation,” Roose says.

In 2021 corn prices bottomed out in September while soybean prices didn’t hit bottom until November. In 2020 both corn and beans hit the lows in August. This year the situation is unclear, but Roose says the market psychology at the moment appears to be somewhat bullish on corn and somewhat bearish on beans.

Traders are looking for good information. While the USDA remains the best and most trusted source of yield and crop condition information, many traders were watching the recent Pro Farmer Tour. That tour indicated that corn yields may not be as good as expected and if that is the case the market will need to ration. As a result, the market has added some risk premium.

A related question is whether the moisture in the Eastern Corn Belt will be enough to raise yields to offset the dry conditions and expected lower yields in the Western Corn Belt.

Meanwhile, farmers are getting ready for the harvest season and watching the skies for rain. Rains that came last weekend helped some producers. The market was bullish on corn Aug. 29.

Roose says farmers need to finalize any pre-harvest marketing plans and start looking at next year’s market plans. Right now the market isn’t providing much of an incentive to store grain. The difference between cash prices and futures prices next year is not large enough to pay for storage and interest costs.

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Gene Lucht is public affairs editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.

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