Weekly grain report

Byron Behne watches the grain markets for the Odessa Union Warehouse.

7/11/12: Holy cow what a morning! Chicago wheat futures ranged 45 cents and soft-white prices fluctuated 25 cents during the morning market hours. Chicago corn futures ranged 63 cents on the day and closed 14 cents lower, which was 44 cents off their highs. The supply-and-demand report was not bearish, as the USDA cut the national corn yield more than expected but down to where the market was figuring it was anyway. They went from their early, pie-in-the-sky number of 166 bushels per acre down to 146. That cut expected corn production by 1.8 billion bushels, but they also cut projected demand by 1.1 billion bushels. The net effect was a cut to projected ending stocks for next year of 700 million bushels versus the June report however ending stocks still grow from this year's projected 903, which was boosted 50 million bushels today. It remains a major question as to what type of prices are going to be required to trim that much demand. There are a lot of wild rumors flying around that the government will reduce the ethanol mandate to free up corn supplies, but nothing concrete on that yet. Meanwhile it’s still hot and dry in the corn belt.

7/12/12: The weather rally continued on Thursday as corn and wheat futures tacked on some additional gains. Wheat futures in Chicago managed to eclipse yesterday's highs, with white wheat tagging along. There are forecasts calling for rain in some areas in the corn belt but so many of those have fizzled lately that the market is looking for additional confirmation before moving lower. Russian wheat production was trimmed by 4 million metric tons on yesterday’s supply-and-demand report, and there are expected to be additional downgrades in the future, as the effects of their adverse growing season become more apparent with harvest.

7/16/12: It’s not hard to guess how the corn crop is doing given the way grain prices have been going. The USDA crop condition scores dropped another 8% out of the good to excellent categories this afternoon and the upcoming week is once again hot and dry for the corn belt. It doesn't look like this is going to stop any time soon. However, we are nearing the all-time high price for corn at $7.9975 from June of last year. The difference was that was old-crop corn and this year it’s new-crop that's priced that high. It will be interesting to see how much resistance is encountered at that price level when we get there, only 15 cents away from this evening's trade so far. Wheat continues to tag along aided by deteriorating Black Sea production estimates.