MAHOMET, Ill. — Uncertainty surrounding the USDA’s July 10 World Agricultural Supply and Demand Estimates (WASDE) report combined with unseasonably wet and cold weather across much of the Corn Belt helped push commodity prices to their highest levels in two years.

Whether prices will remain high through harvest and beyond is a hot topic for debate among agricultural economists and others involved in grain market analysis, such as Jacquie Voeks, a market analyst for the Stewart-Peterson Group.

“The market is driven purely by perception,” said Voeks, who traveled from her home in Mahomet to present a market outlook for members of the Peoria County Farm Bureau. “My boss once told me that the day a contract goes on and the day it comes off is reality. Everything in between is perception – and that’s what drives the market.”

The common perception among most analysts is the belief that above-average rainfall amounts and below-average temperatures across the Midwest will likely combine to keep grain harvests below market projection, resulting in higher prices at market. Though the August WASDE report will help define what prices may look like going forward, they will likely continue to be shaped by market perception until farmers are in their fields harvesting crops, she explained.

“A number of things will impact corn prices. We’re at the highest (price) right now since June of 2014, and we could go higher yet,” said Voeks, who has developed a marketing workshop for basic and advanced options strategies and worked with USDA teaching risk management. “If we were in a declining dollar situation, I probably would say prices could go a lot higher. But the only way I think that we will go a lot higher is if we can verify our perceptions by getting into the fields for harvest, so we won’t really know until October.”

The price picture may be clearer regarding soybeans after the issuance of the August WASDE report, Voeks continued. “USDA re-surveyed Missouri, Nebraska and Kansas. As of last week there were still 20 percent of Missouri’s soybeans unplanted. In fact, Missouri filed a lawsuit against USDA for refusing to extend the grace period for planting beans. I think the August report is going to show a little further reduction in acres,” Voeks said July 17.

“But I don’t trust beans. I’ve seen beans that were maybe 6 inches tall that stood in water for six or seven days and produced 60 bushels per acre.”

Voeks is skeptical of price rallies based on wet weather patterns, as a rule. “At least when you have a drought you know what is going to happen – crops are not going to produce,” she said. “But when you have a wet pattern you cannot project what yields are going to be like. It’s very difficult, even for a farmer, to verify what their crops are going to produce.”

Years with substantial production uncertainty tend to produce prices above those of the subsequent marketing year average, offering farmers an opportunity to forward-price a portion of their crop, according to Darrel Good, an economist with the University of Illinois Department of Agricultural and Consumer Economics.

“That pattern seems to be unfolding this year,” Good noted in a July 13 essay posted on the U of I’s farmdoc website. “New-crop corn prices are currently above both the spring price for crop revenue insurance and above the upper end of the range of USDA’s marketing year average price projection. Still, prices could trade in a relatively wide range over the next 10 weeks.

“Pricing decisions remain difficult for producers, particularly for those with substantial production uncertainty. Risk can be mitigated with a combination of incremental sales at higher prices and options strategies that provide a floor above the crop revenue price of $4.15 for December futures.”