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Markets, Farmers Keep Eye on Forecast

May 26, 2012
By: Sara Schafer, Farm Journal Media Business and Crops Editor
weather radar
  

 

Keep an eye on the weather radar for clues to grain price movements.

 
Rain is in the forecast, at least for some crop-growing regions, reports USDA's Joint Ag Weather Facility.
 
On the Plains, cool weather follows a period of beneficial showers across northern portions of the region. In the Corn Belt, rain is ending across the upper Midwest, where summer crops are benefiting from recent soil moisture improvements.
 
Looking ahead, USDA reports a developing storm system over the Intermountain West will bring a late-week return to rainy weather across the northern Plains and the upper Midwest. The storm’s center will slowly cross the northern Plains during the Memorial Day weekend; total rainfall could reach 2 to 4 inches in the upper Midwest and 1 to 2 inches on the northern Plains. In the storm’s wake, frost is possible early next week on the northern High Plains.
 
In stark contrast, a holiday weekend heat wave will affect much of the South, East, and lower Midwest, with multiple days of 90-degree heat expected in many locations.
 
Jerry Gulke, president of the Gulke Group, says his farm in Illinois could use some rain. "A lot of weather forecasters are saying a lot of rain will fall across the northern plains. But, it leaves a void across Illinois and south. It’s kind of a crapshoot here."
 
He says the market is kind of anticipating rain. "We’ll find out Monday night if we did get good rain this weekend, and if that rain is intact for large areas of the central Corn Belt."
 
Gulke says in Chicago, they broke a record on Thursday for the hottest day in May and may break that record again this weekend. "That doesn’t make me feel real anxious about wanting to sell grain."
 
If the rain doesn’t come, yields will likely fall. Gulke says that will change the pace of this year’s corn market.
 
"If we get a crop problem, an average U.S. corn yield of162 bu./acre or 163 bu./acre, versus USDA’s expectation of 166 bu./acre, we may have already seen the low for the year in corn prices."
 
The upside, Gulke says, is most producers still have crops to sell, which leaves them flexible.
 
"As a producer, if it rains, I’m going to have more to sell. Price times a higher yield is going to be almost the same as a lower yield times a higher price. I have around half of my crop left to sell, and I kind of want to stay open here."
 
Listen to Gulke's full analysis:

 
 

An Overview of Price Movement

Here’s Gulke’s quick take on grain market moves this week:
  • Corn: "In the last 5 trading days, we’ve lost 70 cents/bu. in July corn. I think what’s happening is by the time end users push delivery, it will be August and we’ll have new-crop corn coming in. A lot of people don’t believe that, but the market believes that."
 
  • Wheat: "We’ve had a huge explosion in wheat prices, which started last week. Wheat dropped back to the point where it broke out of its long-term trend line. It found support and turned back up. We’re getting a lot of reports from Texas to Kansas that the crop is good, but not a bumper crop. When you look at that, you say to yourself there is going to be less wheat to feed, which may bring more corn back to be fed."
 
  • Soybeans: "There is still a story in beans. The question is how many acres did we swing from corn to beans? What will the weather be like in August? The currency relationship also has an important role here."
 
 
For More Information
 
See your farm's forecast with AgWeb's Pinpoint Weather.
 

 
 
 

 

 

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