On Friday I drove southeast of Winnipeg to a hog farm. All along the route the crops looked great. A week of good weather had sped them along at unbelieveable speed, catching them up many days and closing a lot of the gap between normal maturity and the delayed state almost all prairie crops have been in all summer.
Saturday I drove out north and east of Winnipeg and saw the same thing. Crops looked much better than just a couple of weeks ago, canola was being swathed and good looking winter wheat crops were being harvested. The extreme danger of frost damage was quickly being reduced by the hot, warm, dry weather.
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Unfortunately, the good conditions prevail across most of the central plains and Midwest of the continent, and that means U.S. crops keep looking bigger and safer from frost. That means worse for prices. And prices have continued to stumble lower in recent days. Corn in Chicago – which sets the baseline for Canadian barley – fell Tuesday to a new 2009 low and almost touched the 2008 low of $2.90. Why? Crop conditions were rated 69 percent good or excellent in the U.S.
Soybeans have been stronger, but are still unexciting at $9.36 on the November contract. And wheat fell to new 2009 lows Tuesday. As one of my markets newsletters said: “The bears are running the show.” Spring wheat has been particularly weak, with 74 percent of U.S. crops rated good or excellent. September Minneapolis hard red spring wheat futures were trading at $4.65.
So crops look much better out there in the field, and worse on the charts. Today Allendale Inc.’s annual farmer survey concluded that the U.S. will produce record crops of both corn and soybeans. Friday we’ll see if the USDA supports that view. Allendale doesn’t forsee a record wheat crop, but with more wheat likely coming out of Argentina and Australia this year, world stocks will increase. Not a lot of good news there.
