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Thursday, May 27, 2021

Corn, wheat and soybean prices were at 8-year highs last week, but seem to have hit 'market top,' analysts say

Last week, corn, soybeans and wheat were all selling at or near the highest prices in eight years. This week, the market fell, "with virtually no change in fundamentals except some improvement in soil moisture levels in the western Corn Belt," Ray Grabanski reports for Successful Farming. "However, the market rallied $1 to $2 from March 30 to May 12 with no change in fundamentals, so it’s likely to drop $1 to $2 by the time we are done, too, with virtually no change in fundamentals. That is simply what market tops look like and how they behave, and this most certainly now can be called a market top in all three major grains: wheat, corn, and soybeans. If a major crop problem develops this summer yet (like a drought), we could rally back up to new highs or the old highs." (Corn and soybean prices are up today.)

There's no sign of any major crop problems right now, especially since recent rainfall has reduced drought-affected areas of the Corn Belt and the forecast continues to call for normal or above-normal precipitation and cooler temperatures across the Midwest, Grabankski reports.

"Crop conditions yesterday continue to show an early planted crop (corn 90% planted, 10% ahead of normal), with winter wheat continuing to improve with above-normal yield potential. However, the first ratings of the year show a hard red spring wheat crop that is the lowest rated ever (even lower than 1988) at only 45% rated good/excellent," Grabanski reports. "Barley is also poorly rated at only 47% rated G/E (vs. 67% last year), mostly due to a lack of soil moisture in the west resulting in poor germination. Soybeans are 75% planted (21% ahead of normal), oats 95% planted (5% ahead), barley 91% planted (4% ahead), and HRS wheat is 94% planted (9% ahead). Yet, while HRS/barley is poorly rated now, recent rains will likely improve those ratings as it has already in pasture conditions (28% rated G/E this week, an improvement of 3%)."

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