High Pressure Ridge In July and Drought?
Over the weekend I read a couple grain analysts talking about a high pressure ridge developing as we flip the calander to July. There was at least one weather model calling for a high pressure ridge developing as we head into the critical month of the growing season for corn. Remember the old phrase, "the corn crop is made in July, the bean crop is made in August." A high pressure ridge blocks storm fronts and typically results in hot and dry conditions.
Hot and dry is not good conditions as corn enters the critical pollination and reproduction phase. There is another old phrase in the grain markets that "we have experienced 2 droughts out of the last 7 that were predicted." Many times when a drought is predicted you will see the corn market begin to rally and move higher. Many times that is an opportunity to sell into the rally.
The fear is selling too much and actually have a severe drought. Then maybe you would not produce enough corn to fill the contract. But if you do not sell much and it rains or there is a forecast for rain, the price drops like a stone and you missed an opportunity. Welcome to the life of a farmer!