Adjectives wear out grain market watchers

One casualty of our record grain markets this year on the Chicago Board of Trade this year is the adjective. We have worn out the old ones, and they no longer have the power to shock us.

I am not sure what it means anymore if prices are “volatile” or “erratic.” Ditto for “jumpy,” “bouncy,” and, well, fill in the blank.

Prices have traded in such huge ranges that I find myself having odd conversations that, upon review, seem to be from another dimension.

Yesterday a farmer asked me what happened that corn prices were down 28 cents on Friday, then up 23 cents on Monday. I told him that I didn’t think anything happened to cause it.

A year ago, I would have thought I was stupid for that answer. Now I think I am just shell-shocked.

Remember nickel moves?

We see trading ranges in one day that used to define a whole season. The reality is that when corn prices can change nearly $3 in a month, 25 cents up or down or both on consecutive days is just the market adjusting to the weekend.

If I had to say why the prices changed so much Friday and Monday, I would guess that when the September corn futures went from 4.855 on last Tuesday to 5.59 on Thursday, some traders were nervous taking the gains into the weekend. So, they took 28 cents of the nearly 75-cent gain back off.

Monday morning they looked around, decided nothing had changed and tacked the quarter back on. This is what used to happen with nickel moves. Welcome to 2008!

Can’t be picky

The really hard lesson from this year if you are a producer, is that you can’t be too picky where you price grain. The moving target moves so fast you can’t agonize if the market moves 20 cents up after you sell something.

Relatively speaking, hitting the market in the right dollar range is doing all right.

Finding a buyer when prices are volatile has been the challenge. The last three weeks of nearby corn futures are a crap shoot. July 23rd we had a low of 5.44. July 30, we hit 6.02-1/4, then dropped to a low of 4.85-1/2 Aug. 12.

Then came the rise to 5.59, a drop to 5.27-3/4, and a rise to 5.59 again in three sessions of trading.

All that, and, in my view, nothing happened.

USDA reports

Nothing happened, except that on Aug. 12, USDA came out with the Crop Production Report that said that the corn crop was bigger than anyone thought, at 12.29 billion bushels.

That was 300 million bushels less than the average trader guess, and 573 million bushels above the USDA July number, but what are a few million bushels among friends?

So, if you do look at the numbers above, we did make the low that day, but we also closed at 5.09, most of 25 cents above the low. Then, we went 50 cents higher. Go figure!

Nothing really happened in soybeans the last two weeks, except USDA cut the crop size estimate to 2.973 billion bushels, down 27 million bushels below the July numbers and 28 million below the average trader guess. Yes, we did trade higher after that.

The low was actually Aug. 8 at 11.74 November futures, and we are now $1.15 higher than that, at 12.89 Monday night. Still, we were at $14.17 on the last day of July. So, we actually lost nearly $2.50 in two weeks, and have only gotten half of it back after a bullish report.

Erratic. Jumpy. Volatile. Pick your adjective — I give up.