It’s getting Hot (and Dry) in here

So about those record US Crop plantings and the big downtrend in grains in 2013…. Don’t look now but Corn and Soybeans (the bean itself, the Oil, and the Meal) went Neon today, with all up more than 4%, and Wheat up more than 3%.


Chart Courtesy: Finviz
Disclaimer: (Past performance is not necessarily indicative to future results.) 

This has been a crazy summer for grains, as the USDA predicted 97 Million acres of corn planted, the most since 1936. Corn futures reacted by dropping in price; and some hedge funds have made large bearish corn bets. However, since the initial announcement, the updated crop numbers have been slowly dropping the number of billions of bushels expected, down to a predicted 13.7 billion-bushel crop.

And now the forecast for hot, dry weather in the Midwest this week is pushing prices higher as people realize it’s not just how much is planted, but how much comes out of the ground in good shape that matters. Per Bloomberg:

Temperatures will average as much as 14 degrees Fahrenheit above normal during the next 10 days, with little rain expected in the Midwest, T-Storm Weather LLC said in a note to clients today. July and August will be the driest since 1936 in Iowa, Illinois and Indiana. Corn production will be 2.2 percent below the government’s forecast on Aug. 12, while the soybean harvest will be 3 percent less, Professional Farmers of America said Aug. 23, after a tour of crops in seven states last week.

Need photo proof… we noticed  a picture on our twitter feed of some not so healthy looking corn in Illinois via Jeannine Otto of Agri News.

Agri News Tweet

Photo Courtesy: @AgnewsOtto

Amongst Ag traders on Attain’s recommended list – M6 and Global Ag were both long Soybeans coming into the day (past performance is not necessarily indicative of future results), while Rosetta Capital has had a contrarian view, holding the Beans short.  But the bigger story is the continued decoupling of various markets from each other as Risk On/Risk Off continues to fade away. Managed futures was built, in part, on the back of crop reports and the like moving markets – not quantitative easing and government intervention.  this is something we wouldn’t mind seeing more of that kind of movement.

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