BISMARCK – What a difference a day – and a rain – can make in grain markets.
Chicago traders, looking at widespread showers Monday and predictions of more of the same for the weekend, bid corn prices down the 20-cent limit Tuesday. July corn closed at $3.96 a bushel, and soybean prices dropped 26 cents, closing at a $7.99 cash price.
Paul McTaggart, manager of the Steward Grain Co. elevator at Bismarck, said about a half-inch of rain soaked fields in his area, and he's very optimistic about the condition of crops, especially corn.
"We've got one of the greatest corn crops ever," McTaggart said. "We haven't hurt this crop yet. But in another week, we're definitely going to need rain. With all this warm weather, corn has picked up. I think we'll be in pollination in a week, around the first of July, and the early weeks of July. The corn is 6 feet tall."
And McTaggart, a Watseka resident, said 1.2 inches of rain fell near that community and crops look excellent.
"I've been saying all we need is a shower to make the markets go down, and that's what happened," he said.
Pam Jarboe, assistant manager of Bement-based Topflight Grain Co., said the rains missed her community – again.
"We had about two drops in the rain gauge," Jarboe said. "Corn looks really bad in the middle of the day. Monday when it was cloudy, the leaves were open waiting for rain, and then it didn't come. Farmers are very worried."
She said Topflight elevators in other communities like Monticello, which had 0.7 inches of rain Monday and Tuesday, report better rain results.
Jarboe said that even though prices are down, they're still tempting to farmers who remember summers when corn prices were in the $2 range.
But they're not selling because they're waiting to see how the weather works out, she said.
"People who sell ahead have already sold as much as they feel comfortable selling," she said.
"Most farmers don't think they're going to raise a crop, so they're not selling," she said. "I think they should. The bean market's high, too, and they should be sold."
Larry Wood, manager of The Andersons' Champaign elevator, said he thinks extended forecasts played a more important role in the market plunge Tuesday than the actual rain.
"We had half an inch, and it's enough to get us through a week or so," Wood said. "There was a lot of variation across the county, and it was a narrow band."
He said he'd rate the current corn crop a 7 out of 10.
"We have a good chance of a 180-bushel crop out there, but we need water once a week until mid-July to get over the hump," Wood said.
He also said his customers are holding tight to old-crop corn and aren't pricing new-crop "until they know it will be there."
Wood said demand, both domestic and foreign, is driving the market, and prospects for ethanol are a key factor.
"Demand projections are 12.3 to 12.4 billion bushels, and the government's production projection is 12.5 billion bushels," he said.
"Prices are up because the energy value of corn is worth that much. We won't see $2 corn again."
In recent history, Wood remembers only one time when corn prices topped current levels – in July 1996, buyers got nervous because the short 1995 crop was running out and corn briefly shot up to $5.54.