Rain, Rain Go Away – For Awhile

If too much of anything is a bad thing, then too much rain is becoming a bad thing for many US grain and soybean producers.

“Rain makes grain” is an axiom for grain and soybean traders around the world, but too much rain in parts of the US Midwest has kept farmers out of many fields through the planting season.

Not only is flooding still an issue for many in the Midwest, particularly Missouri, where thousands of acres are not planted because of standing or running water, but soggy soils are turning crops yellow in spots where they have been planted.


A graph of Jul corn futures prices from the CME Group shows the market has taken notice of the hardships farmers are facing.  Prices began to rise sharply the week before Tuesday’s USDA acreage report, which showed estimated corn planted acreage at 88.9 million acres, down 0.34% from March’s estimated 89.2 million and 1.88% below last year’s 90.6 million.

Traders also began to worry about the condition of the crop that did get planted.  The USDA’s National Agricultural Statistics Service weekly crop progress and condition report rated the corn as 68% good to excellent, down three percentage points from 71% in the prior week.




With the corn-based rations being fed to livestock and poultry, it should come as no surprise that the higher corn costs hurt the bottom lines of these producers.

Many feeders still operate on a cash basis for feed, buying what they need when they need it.  Larger producers likely hedge or pre-purchase their corn, but at some point they have to step into the market.

The higher corn futures prices of the past 1 ½ weeks certainly have gotten the attentions of feeder cattle futures traders.  Prices for the Aug contract have worked lower, and market volatility has increased over the last four trading days.  The market appears to be caught between a desire to decline because of higher feed costs and a desire to move higher because of continued tight calf supplies.




In a surprise move Wednesday, cash fed cattle markets in the Plains traded higher from last week’s market.  Business in the country may be about done for the week ahead of the Independence Day holiday weekend.

Cattle traded Wednesday at $148 to mostly $150 per cwt on a live basis, up from mostly $148 last week.  In Nebraska’s dressed market, cattle traded from $235 up to mostly $240, compared with the bulk of last week’s sales at $237 to $238.

Estimated volumes were large enough for most feedlot showlists to be cleaned up, and many expect a quiet day in the country today.

Boxed beef prices were lower Wednesday, with the USDA reporting its choice cutout value at $252.29 per cwt, down $0.44, and its select cutout at $249.26, off $0.09.  After a drop last Friday, the beef market has struggled against seasonal pressure and has generally continued working lower.

The CME Feeder Cattle Index for the seven days ended Tuesday was $228.27 per cwt, down $0.18.  This compares with the Aug futures settlement of $218.50, up $3.77.