Soybean futures had a historic price decline on Thursday but rallied back half of that decrease on Friday. Corn futures also fell the limit on Thursday but rallied back on Friday nearly all that was lost the day before.
Every day there is some type of rationale used to justify the price movement, but fundamentally supply is still tight, and the upcoming weather impact is still unknown. Therefore, last week’s price volatility is likely to continue for at least the next 4 weeks. The weather reports are updated every 12 hours and each one can cause the market to move substantially. Several weeks ago, I said to buckle up for a bumpy ride, but with these price swings it seems more like farmers are going off-roading and need to be strapped in with a 5-point harness.
Last week I traveled to and from Minneapolis to our family farm near Beatrice, NE. I have highlighted in yellow the route I drove on the map below.
Based on this map I expected to see fields with signs of stress in southern Minnesota and northern Iowa; however, the corn I saw there did not look like it was experiencing any significant drought conditions. Comparatively, western Iowa and eastern Nebraska had more fields looking dry, even though the latter of the two does not align with the data on this map.
In 5 of the 6 days, I was in Nebraska, it hit 95 degrees and the corn was rolling up each day in protection from the dry hot weather. On Thursday, the day we travelled back to Minneapolis, it hit 104 degrees with 20 mph winds. While these current extreme temperatures are not great for corn development, it is only June and corn is not soaking up as much moisture now compared to what it will need in the middle of July.
Some weather forecasters are comparing current weather conditions to the dry years of 1988 and 2012. They suggest that July could be extremely dry, and a huge price rally will be in order. Others are anticipating timely July rains like 2013 and 2017, which resulted in prices trending lower throughout the growing season.
Again, this week some analysts are predicting the highs are already in, while others expect new highs in the next month or so. The 2021 corn production estimates will remain uncertain until after the June 30th Acreage Report and once reliable weather forecasts for the pollination period for most of the crop become available. Until both happen, the market will be highly reactive and extremely volatile.
Jon Scheve Superior Feed Ingredients, LLC
9358 Oak Ave Waconia, MN 55387 jon@superiorfeed.com