This article is long and tedious. Pretty much what is says is the wehat market has gone nuts and the corn and bean market may follow suit. USDA lowered the crop predictions this month
This guy is the manager of a coop near here and puts out this weekly letter
on their website. He explains pretty well whats going on in the markets.
It's getting cold! 10/13/2006
Dear Friends:
As the central Illinois harvest continues to move
ahead, we have had a new element added to the
mix - cold temperatures. About 5:00 Wednesday
night, a cold front entered the area sending the
mercury in to its hole looking for cover and sent
farmers into their closets looking for their coveralls.
Yesterday morning, we had our first frost of the season
as morning lows came in around 28 degrees. The
weatherman is calling for temperatures to return to
normal, between the mid 40's to 60's over the weekend.
However, he sure got our attention the last couple of
days.
As far as the harvest, 0.1 to 0.2 inches of rain during
the night Tuesday slowed down the progress of the
soybean harvest for a day or so. However the corn
harvest is still progressing nicely. Based on our best
guess, we believe the local corn harvest is now 74%
complete, while the local soybean harvest has hit the
80% mark.
While the rain Tuesday night was not very large, it
was certainly welcome. I haven't heard of any field
fires yet this year (there was a combine fire this week,
but it wasn't directly related to the dry conditions).
However, the dust being discharged from the back of
combines is just hanging in the air. I heard of a car
wreck over in the Champaign area this week due to poor
visibility from the hanging dust clouds. At least for
a couple of days, the rain has helped the dust issue
tremendously.
As far as the US as a whole, corn harvest is now
29% complete. State by state here in the corn belt,
progress is: Missouri 84%, Kansas 69%, Illinois 44%,
Indiana 19%, Nebraska 18%, Iowa 17%, North Dakota
17%, South Dakota 16%, Wisconsin 10%, and Ohio,
Michigan and Minnesota are all at 8%.
The US soybean harvest is now 47% complete. Again,
state by state here in the corn belt is: North Dakota 77%,
Iowa 68%, Minnesota 62%, South Dakota 52%,
Nebraska 49%, Illinois 47%, Missouri 37%, Kansas 32%,
Wisconsin 22%, Michigan 19%, Indiana 18%, and Ohio
15%.
The county just north of here (Macon County, Illinois)
released the results of their 2006 Macon County Corn and
Soybean Plots this week. In corn, they had 54 varieties
in the plot which ranged from 144.2 bushels per acre up
to 249.2 bpa, for an entire plot average of 200.6. In
soybeans, they had 51 varieties in the plot which ranged
from 48.7 bpa up to 70.9 bpa. The soybean plot averaged
59.9 bpa. (These average yields are well above what we
will average in Shelby and Christian County.)
I know this is corn and soybean country, but most
of the agricultural news I picked up this week all
concerned wheat. It has been a wild ride for wheat
over the last week and a half, and I am not sure
that it is anywhere near being over. Let me give you
a quick run down on some of the excitement in
wheat here lately. First of all, drought conditions in
various parts of the world are causing some real concern
about world wheat supplies this next year. The
Australian Wheat Board announced this week that
they expect their wheat crop to total 11.5 million
metric tons as compared to 25.0 mmt last year.
Because of this, they have suspended wheat exports
for the time being in order to protect their domestic
supply. The US Ag Attaché to Brazil lowered estimates
on the Brazilian wheat crop to 2.4 mmt vs. a crop of
4.8 mmt last year. Russian consultants predicted
the Russian wheat crop at 43 mmt vs. 47.7 mmt last
year. The government of Ukraine has suspended exports
of wheat due to grain companies refusal to meet the
government's terms and conditions for increasing their
country's strategic wheat reserve... And so on. No
good news anywhere to speak of (except some good
rains this week in Texas, Oklahoma, and Kansas,
which may lead to a better US crop next year).
When you add to this, all of the games being played
in the wheat spreads (which I talked about last week),
the price of wheat has sky rocketed. On the Chicago
Board of Trade, wheat futures have closed on "limit up"
moves four times so far this month, and prices have hit
levels that are at 10 year highs. When will it all end?
The answer to that question is not currently known.
However, the volatility will most likely continue until the
world gets comfortable that old crop wheat supplies
won't run out.
On Thursday, the USDA released their October
Crop Production Estimates, and man did they
surprise some people. While most of the trade
was trying to predict how much the USDA would raise
their corn production number, the USDA actually lowered
it. The September corn production estimate was 11.114
billion bushels. In October, their new number is 10.905
billion. In soybeans, the production estimate went up,
but not as much as expected. The USDA September
number was 3.093 billion bushels. The October number
is 3.189 billion.
The first case of soybean rust was found in Illinois
and in seven counties in Western Kentucky over the last
couple of weeks, but it is late enough that it won't cause
any crop damage or yield loss. The Illinois county where
it was found is in Pope County. Pope County is in
extreme southern Illinois, located in the heart of the
Shawnee National Forest. It borders the state of Kentucky,
and is probably only about 40 miles from Indiana. Since
the rust spores can not winter in freezing conditions, it
will be everyone's hopes the get some exteme cold in
southern Illinois this winter. I will share more news on
this as I get it.
I don't know what to tell you about grain prices, except
hang on for the ride, folks. What a crazy week. I already
told you a little about why the wheat market went up so
much this week, but who would have guessed that corn
and soybeans would have followed. Are you ready for
these prices? Here you go. The closeing cash prices
for grain in Assumption tonight are: corn $2.98 (up 46
cents for the week), soybeans $5.61 (up 34 cents),
and wheat $4.64 (up 61 cents for the week).
