first_imgShare Facebook Twitter Google + LinkedIn Pinterest A phone call last month was a first for me as to its ending. As I was talking with a customer mid-morning, I heard these words at a little faster pace, “Doug, I have to go. I see a groundhog I have been trying to get for months.” I think the next sound I heard was, “click”.So far this is the summer that wasn’t. Frequent and plentiful rains during June and early July have kept growing conditions less than ideal in many areas across Ohio and the Midwest. Persistent rains falling in already drenched fields and declining crop conditions have played a large role in the price rally for corn and soybeans.While it is difficult to translate crop conditions on a certain date into a final yield for U.S. corn and soybeans, one thing seems fairly certain: we have seen the year’s high for U.S. corn and soybean yields for this growing season. USDA currently has the U.S. corn yield at 166.8 bushels per acre and the soybean yield at 46 bushels per acre for this crop year. Many had expected that USDA would lower U.S. corn and soybean yields with the July 10 supply and demand report as compared to June. History would suggest otherwise. Since the early 1990s, the corn yield from June to July was only reduced one time, in 1993. Soybeans fell in just two years — 1993 and 2012. Following the report, many had estimated the U.S. corn yield at 162 to 164 and the soybean yield at 44 to 45. It would take a perfect set of crop conditions and weather in the good areas to offset the yield losses seen to date. Early in June, November CBOT soybeans had fallen to $8.96. Key was their inability to close below the magic threshold of $9. Bears lost control of prices at that point. Since that low, November soybeans have rallied to 10.40. In just a few short weeks the combined fund short positions for corn, soybeans, and wheat that had set several weekly records quickly changed.Weather at times does not have to be rocket science. The reality of entrenched weather trends being difficult to break is upon the state of Ohio. Frequent rains have provided plenty of moisture. Corn has benefitted the most while soybeans gained little benefit. Soybeans do not like wet feet — just look at a 30-day moisture accumulation report for the month of June in Illinois, Indiana, and Ohio. The red color on the moisture charts for high rainfall stands out like a sore thumb.Back in early June, numerous customers were commenting that soybeans were not growing in their normal fashion. Growth was stunted and leaves were yellow. The days of rain are outnumbering the days of sunshine and no rain. Suffice it to say that as of mid-July, many are talking of at least average to above average corn yields. That is not always the case for north central Ohio and especially northwest Ohio. Those areas saw 10 inches or more of rain in June. However, soybean yields could be just average. While the desired outcome is for both corn and soybean yields to both be above average, the reality is that combination does not happen year after year.December CBOT corn made new highs for the past 12 months as they reached $4.49 this month. Corn producers were finally rewarded for their wait in the return of $4 corn. More patient producers have been able to see new crop fall delivery prices for corn at $4 and soybeans at $10. The question remains, “How high will corn and soybean prices go this summer?” Prior to the July 10 crop report, trade estimates for corn ending stocks ranged from 1.26 to 1.91 billion bushels. Soybean ending stocks ranged from 193 to 450 million bushels. This huge amount of uncertainty means huge price volatility will be apparent in the weeks ahead.With the huge range of crop conditions in the country, yields are extremely difficult to determine. Prices will be fast moving with huge price ranges for both corn and soybeans. Yield estimates remain wide as we reach August. Shortly before the July 10 USDA crop report, a good friend in Illinois relayed these thoughts. “Twenty days ago my clients were fearing low grain prices. Now they fear the yields they hoped for may not materialize.” How quickly your perspective can change during the course of the growing season. The market’s job will be to get a better handle on yields in coming weeks.P.S. The groundhog hunt was successful.last_img

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