Corn staged a large rally today despite a break in the outside markets. December corn ended 17 cents higher at $6.85 ¾, November soybeans up 4 ¾ cents at $13.62, and December wheat up 5 cents at $$7.20 ¾.
Markets are still highly focused on the US debt deal. Since yesterday it has been expected that congress has reached an agreement to raise the debt ceiling, and as a result the markets rallied sharply overnight. Coming into the day however, the markets opened sharply lower after the ISM index came in sharply below expectations. Despite a sharp break in the equities, a rally in the US dollar, and a sharp break in crude oil, grains still managed to hold support. Part of this support could be beginning of the month reallocation, or possibly pre- crop ratings purchasing.
Crop ratings were out at 3 pm and to the market’s surprise corn ratings were unchanged from last week. Here is the following breakdown:
Corn Current 5-Year-Average
Silking: 83% 84%
Doughing: 18% 23%
Dented: 4% 5%
Crop condition at 62% good-excellent. This is unchanged from last year, and right at the 10 year average of 62%
Soybeans Current 5-Year-Average
Blooming: 77% 81%
Setting pods: 34% 45%
Crop condition at 60% good-excellent. This is down 2% from last week, and right at the 10 year average of 60%.
Winter wheat is 81% harvested compared to 86% on average.
Spring wheat crop condition dropped 4% from last week to 70% good-excellent.
This report was slightly "bearish" for corn and "bullish" for soybeans based on market expectations and we may see this on tonight’s opening trade at 6:00pm. Since we are still at the 10 year average for corn and bean ratings, and weather looks favorable in the near future, we may see this start to weigh on prices. We still have the August 11th Supply and Demand (next Thursday). We feel that it is a good idea to get well protected between now and then. We have some strategies in place to get extra hedged on the downside, please call your broker if you would like to go over these and how they may help your operational risk.