Market Analyst: The bull rages onward

Ray Grabanski
Special to the Farm Forum

The bull market is still running, with the market going higher in corn and soybeans and making new highs this week - even while wheat had a bit of a correction. There was rain and snow in winter wheat country, with the moisture helping wheat crops in Kansas, Oklahoma and Texas by alleviating some drought conditions. Also, concerns about the late arrival of the rainy season in Brazil supported corn and soybeans.

Weather forecasts call for above normal precipitation in Brazil next week, and then a return to a more normal precipitation in the 8-14 day forecast. That will greatly improve the planting outlook in Brazil, and expand planting progress. Temperatures will be mostly normal to below normal in all of South America, including Argentina. However, Argentina will see below normal precipitation for the entire two week period.

In the United States, its still snowing in New Mexico, Texas, Oklahoma and Kansas where they need the precipitation for the winter wheat crop. Actually, the recent snow and rain is very beneficial for them. With an above normal precipitation forecast, the next five days will also be considered beneficial (which is why wheat prices dived lower early this week).

Corn and soybeans held on in price, with new highs in both markets during the day. U.S. harvest continues to grind forward, with 72% of the corn harvested (16% ahead of normal) and 83% of the soybeans harvested (10% ahead).

Cotton is 42% harvested (equal to normal) while sorghum is 74% harvested (13% ahead). Sugar beets are 89% harvested nationally, 14% ahead of normal, while sunflowers are 50% harvested (13% ahead). Winter wheat is 85% planted (5% ahead), with 62% emerged (2% ahead). Conditions, though, are not good at 41% rated good to excellent, down from 56% rated the same last year and the second lowest in the past 10 years. Pasture and rangeland is rated only 20% good to excellent, compared to 45% last year.

However, soil moisture levels in the U.S. were up sharply last week, reducing the chances of drought next year as moisture did come to the northern corn belt last week (although mostly in the form of snow) while the central belt received rain.

Topsoil moisture levels rose, with 10% to 54% rated adequate or surplus, a large rise in only one week. Subsoil moisture levels rose 5% to 52% rated adequate/surplus, but still well below the 78% rating last year. The improvement does argue for less chance of a drought in 2021 - something that could become more bearish if that wet week continues in the weeks and months ahead this winter.