Weekly grain report

7/18/12: Chicago grain futures traded lower most of the morning on profit-taking, but no significant changes were made to the weather forecasts. Things reversed higher after the Ag Secretary said there would be no revision to the renewable fuel standard. For now the government is standing pat, but they could always change their mind down the road as the corn crop continues to deteriorate.

7/19/12: It’s starting to get weird out there. There was lots of action in the spreads in the grain futures markets, especially on the close. Spreads are the difference in price between contracts that are trading for different time periods. Chicago September wheat futures gained 31 cents on the day, while July 2013 futures lost 20 cents, a 50 cent move on the day. Corn and soybean spreads made similar moves. Chicago September wheat closed a penny higher than December. Spreads weakening, especially to the point of inversion, is a very bullish market development and shows that end users are becoming concerned with availability of supplies. Corn and soybean futures have been inverted for a while now, and now wheat has decided to join the party.

7/23/12: Boom goes the dynamite! In this case the dynamite is soybeans, which tanked almost their daily limit of 70 cents in Chicago futures today and now as the evening session has opened are down another 35 cents. Of course, that makes sense, what with soybeans having potentially the biggest supply problem should the crop get any worse, which it did last week as the condition index dropped below where it was at this time in 1988. Wait a minute. That makes no sense! Get used to this, because, given the price levels versus the conditions of the corn and soybean crops, we probably haven’t seen anything yet, good or bad. Today seemed more about global financial markets than grain markets however investment money makes up a large chunk of the grain markets these days so this will continue to be a major part of our prices going forward. On the bright side this is going to give some end users an opportunity to get some coverage at less than record prices.