Corn’s precipitous drop

Corn prices dropped sharply last week, going from a high of $4.49 Dec. last Friday, June 17, to a low of $3.825 June 24 for a huge 67c drop in one week. That price decline indicated corn prices may have topped for the summer, but they have recovered quickly to above $4 so far this week. We may need a bit more recovery, though, to make additional sales of corn. Soybeans have also bounced back nicely after sharp declines last week as well. In fact, Nov. soybeans topped out at $11.86 on June 13, only to drop $1.04 to the low June 24 of $10.72. So we have seen a very sharp, precipitous decline in grain prices in the past week or two. That makes it important to sell a 33%, 50%, or 66% recovery if the corn and soybean market can muster up one.

Weather forecasts for the U.S. look a little drier today, June 28, for the 7-day and the 8- to 14-day forecast, and that is providing a bit of spark in grain prices today. Also, the temps will remain moderate for the next 7 days, but then will warm up somewhat in the 8-14 day forecast. It’s getting close to the reproductive stage of crop development for corn and soybeans, a very important time for determining yields.

Crop conditions yesterday indicated not much change from last week, with corn still at 75% rated G/E, and our Pro Ag yield model rising somewhat at 1.12 bu/acre this week to 168.7 bu. Corn silking is 6% vs. 5% normally reflecting the slightly earlier than normal planting progress. Soybean crop conditions were rated 72% G/E, down 1% from last week and vs. 63% last year at this time. However, the Pro Ag soybean yield model was up slightly at 46.4 bu/acre, up 0.16 bu/acre from last week. Soybeans are 95% emerged vs. 91% normally, and 9% blooming vs. 7% normally, so we are slightly ahead of normal progress.

Winter wheat conditions also improved another 1% to 62% G/E vs. only 41% last year, with the yield model rising a more significant 0.45 bu/acre to 50.76 bu/acre, now a bit above the USDA projection of 50.5 bu/acre. So the winter wheat model is reflecting that yields are probably better than expected among winter wheat harvesters. Winter wheat is 45% harvested vs. 41% normally, so that is also progressing at a good pace.

Spring wheat is 56% headed vs. 27% normally again reflecting the early planting, with conditions dropping 4% to 72% G/E, as some areas are becoming too dry while others are becoming too wet. Barley conditions are 75% G/E, down 2% from last week and vs. 73% last year at this time.

Topsoil moisture conditions declined nationally 5% to 69% rated adequate/surplus, well below last year’s 83% rating so the dryness the past week is having an impact on soil moisture. Subsoil moisture is also depleted a bit last week, down 4% to 74% rated adequate/surplus vs. 83% last year at this time. So there is a chance to rally if dry weather concerns reemerge this summer.

Prices had risen over $3 in soybeans and $0.85 in corn over the past few months, making sales attractive again in late May/early June. Pro Ag advised buy, buy, buying this winter at the lows, and now finally we were advising selling some corn and soybeans in late May/early June. We do want to get some more sales made on the downside of this market as it appears the trend is changing to lower.

Perhaps a 50% recovery is a good target, which would mean $11.34 Nov. soybeans to make catch up sales, and $4.15 Dec. corn. These aren’t as good as the prices as we saw in mid-June, but perhaps that is all the recovery we can expect. In soybeans, we are right there in price today as we await the June 30 USDA planted acreage report.

Wheat has been a disappointment this year, with prices not fluctuating much up due to the large yielding winter wheat crop in 2016. USDA is already projecting a record shattering yield of winter wheat at 50.5 bu/acre, 2.7 bu/acre larger than any other winter wheat crop in the history of the U.S. So wheat prices have not given much opportunity to price anything this year. Perhaps after harvest prices can muster up some strength, but the U.S. dollar strength after the vote of Great Britain to leave the EU was somewhat devastating to wheat prices as we went to new lows in all 3 markets. If you have wheat you are forced to sell in this downturn, you may want to look for a way to own it back as prices are already very bad.