Analyst is surprised that grain prices are not retreating

Harvest continues to advance. It's a perfect harvest, so far, for most fall crops.

Almost every crop is ahead of normal harvest progress due to the warm fall (except sugar beets), which usually leads to smaller harvest losses. To make things more bearish, yields have been better than expected for most producers, including the drought-ravaged northwest Corn Belt. So, as production estimates continue to improve, it's quite a surprise that prices aren't retreating.

In fact, prices are stagnant or rising (as in the case of new HRS wheat highs).

Weather remains warm, with temps above normal for the entire two-week period in the U.S. That will help accelerate harvest of crops, although precip will increase (it's been very dry), with above-normal precip forecast the coming week in the Pacific Northwest, and then moving into the central Corn Belt in days eight to 14.

Recently, wet weather has improved soil moisture again this week, with topsoil moisture now at 63% rated adequate/surplus (+5% this week) vs. only 44% last year. Subsoil gained 3% this week to 55% rated adequate/surplus (vs. 47% last year). Soil moisture levels have been replenished nicely this fall, reducing the risk of drought next spring.

Weekly crop progress, yesterday 10/18, showed excellent harvest progress, with corn 52% harvested (11% ahead of normal), and soybeans 60% harvested (5% ahead). Most other crops are also ahead of normal harvest progress, with sorghum 59% harvested (9% ahead) and sunflowers 29% (8% ahead), while winter wheat is 70% planted, 1% behind normal. Sugar beets, however, are behind normal harvest progress due to heat delaying harvest (40% harvested vs. 61% normal).

Corn crop conditions remained 60% rated G/E, but the yield model improved 0.5 bu in its last week to 177.4 bu final yield. It's likely that corn yields nationally will also be increased slightly due to the excellent harvest weather and better-than-expected yields. Soybean crop ratings have ended as well as harvest is over 50% complete.

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• Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country. See http://www.progressiveag.com for rankings and link to data from Top Producer Magazine and Agweb.com.

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