Harvest activity across the Midwest is putting seasonal pressure on grain markets. (Photo courtesy National Corn Growers Association)

By Carrie Muehling

NORMAL - Grain markets are taking a defensive approach as harvest activity ramps up in many areas.  The corn harvest is nearly 25 percent complete nationwide and about 10 percent of the nation's soybeans have come out of the fields.  From the Decatur area on south, the corn harvest is wrapping up for many farmers.  Some are finding some better than expected yields, and aflatoxin is also a factor.

"Ideas are that we could probably see the market drift here until we get into end of September and start to wrap up harvest as a nation," said Curt Kimmel, commodity broker with Bates Commodities in Normal.

The crop is much smaller than farmers initially expected, and end users will use the harvest pressure this fall to gather some inventory.  Markets likely will firm up again through the early part of the winter.  Farmers are making plans for next year, and that includes looking at marketing.

"A large percentage of producers probably sold a little too much too soon and that 30 percent sale became a 75 or 80 percent sale real quick with this smaller crop in some of these areas that missed the moisture," said Kimmel.  "A lot of guys have taken out crop insurance and used that as a tool to sort of manage a little bit of risk, not only from the production side, but from the market side, too."

Farmers in Illinois are hoping for better growing conditions going into next season based on recent rains, but that is not the scenario further west in areas of Kansas and Nebraska.  To the south, there is a trend towards putting winter wheat in with the plans to double crop with soybeans next spring.

"We see a big, huge increase in winter wheat acres because when you get to Springfield on south, guys have a great opportunity to put wheat in and come back with double crop beans and if they get a decent wheat crop and a decent bean crop, cash flow wise that's pretty lucrative for those guys on south of us here, so we'll see if that trend continues here as we move into this fall," said Kimmel.

Those soft red winter wheat acres are just a small piece of the pie.  It will take a good growing season next year for corn and soybeans to alleviate the concern about corn supplies for livestock and ethanol.  Kimmel said there has been a draw down in the demand side of the equation as $8 has been a key number for livestock producers who don't want to pay any more than that for corn.

Kimmel said outside markets will continue to influence the grain trade, as well.

"Talking about this QE3 pumping more money into the economy, longer term that's inflationary, so that's going to be a wild card as we move on down the road," said Kimmel.  "But when we pump money into the economy and have a little more confidence, people tend to move some investment money around.  We feel the investment money is still going to be in the marketplace and create some big ups and big downs as we move through this winter and next spring."

Above all, the market remains dynamic and presents opportunities, in Kimmel's opinion.

"It's one of those 'once in 20 or 25 year' types of markets that has occurred here.  We feel it's an excellent opportunity for guys who've got some extra cash grain to sell at these historically high prices," he said.

Carrie Muehling can be reached at carrie@wjbc.com.