While a drought has affected the western 30% of the U.S. Corn Belt, a change in the weather pattern towards cooler weather comes at a critical time for Midwest crops. Why the collapse in corn prices? Even if it remains dry in some areas, with last week’s extreme heat abating, national corn yields could still exceed 165 bushels/acre. This is not enough to warrant a bull market in corn. However, last week’s heat and dryness could be enough to result in short covering in corn and soybeans on Tuesday given my expectations of worsening crop conditions. Bottom Line? More volatility for grain prices in a trading market, day to day.
Source: extension.entm.purdue.edu/fieldcropsipm/corn-stages.php
We suggested to newsletter subscribers a possible buy in corn last week, a sudden shift in the Midwest ridge and rim of fire rains in Iowa last Friday, alerted us to warn our day to day customers last Friday that the weather was actually much more bearish, for now. Also, important rains will hit Iowa mid-late this week. However, some of our longer term research suggests that after a week or so of cooler weather, hot temps could still threaten soybean yields in August (stay tuned if you are a day to day subscriber)
Nighttime temperatures are the most critical environmental factor during the early reproductive stages. The table below shows the effect of temperatures on corn and soybean yields. Notice how corn yields rise when the weather cools in July.
Source: GLOBALCHANGE.COM
PATTERN CHANGE
A change in the weather pattern has caused a sharp break in corn prices. Notice the cooler outlook the next 2 weeks. The western heat will have to move east in August if there is any change for a rally in soybeans. Soybeans actually do not mind dry weather if the weather is cool. While temps will be cooler next 2 weeks, again, any shift in the ridge east will cause price concern for grains, especially soybeans next month. If the ridge stays wet, corn and beans will remain under pressure, following what I expect to be friendly weekly crop report, today, Monday due to last week’s heat.
For updates in which are volatile weather and price changes for grains, at times, email us at
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