Home News Michigan Ag News Avoid Getting “Too Bulled Up”on Weather Forecasts Feeding Grain Markets

Avoid Getting “Too Bulled Up”on Weather Forecasts Feeding Grain Markets

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Corn field on a sunny day. Photo: Ashley Davenport

So far, all of July has been hot for the entire Corn Belt, but we could see a break in temperatures. Well, temperatures in the upper 80s instead of in the 90s.

This temperature moderation and some slight chances of rain are being factored into the markets, and according to Karl Setzer of AgriVisor, this will temper gains as it did on Tuesday.

“[It will be] fleshing out our weak longs that were established, especially as we start to look forward to Friday’s WASDE report, so a little bit of uncertainty pulling some trade back out,” he said. “Don’t get low by the current conditions—as we look towards the end of the month, we have some forecasts starting to peg temperatures with highs above what we saw to start this week.”

Those scorching temperatures will arrive in Michigan and the rest of the Corn Belt around pollination.

“We definitely need to keep an eye on weather,” said Setzer. “I don’t see a price collapse coming at us by any means. We’ve bounced off technical support. All things considered, it’s still a decent market.”

Aside from weather, there’s a lot of reports out this week: World Agricultural Supply and Demand Estimates report on Friday, Commitment of Traders and Crop Progress. Those reports are definitely supplying the markets with fuel.

“A bull market needs to be fed,” said Setzer. “You wouldn’t think just one day without information we’d see the setback we did [Tuesday]. Corn got a little bit overextended to the upside. Soybeans had an RSI of 72 percent Monday—that is overbought.”

Setzer says we’re starting to see buying develop on the breaks, which is a good sign for the market.

“Don’t get too bulled up because we don’t know what could happen,” he said. “As soon as we see a forecast change that’s calling for cool weather and more rain, then we could give back a lot of what we’ve gotten here in the last seven trading sessions.”

Monday’s Crop Progress Report showed a decline in corn and soybean conditions nationally and in Michigan. Given the conditions in the western Plains, Setzer has heard of corn burning up. Here in Michigan, the crops are starting to see some drought stress. It wouldn’t come as a surprise if conditions continue to deteriorate in the July 13 report.

“The thing we have to look at is we are coming off such high levels that even if we do set conditions back a little, we can still have one of the best rated crops in the last five to 10 years,” he said. “We’ve got to look at what that’s telling the trade and a lot comes back to the genetics of the crops that are better able to withstand some of this pressure.”

Setzer says despite China not being on track with its Phase One ag purchases, it is “a great benefit” because USDA didn’t incorporate those numbers into balance sheets. Hear his full comments on China in the player above.