Grain commodity prices continue slide lower

Prices have continued lower on the Chicago Board of Trade recently.

Corn prices have made three-week lows, and the USDA Supply and Demand Reports just being released here on Tuesday morning are not going to be a reason for prices to recover.

Traders have focused on exports, transportation issues, South American weather, and politics as reasons for the decline.

The corn exports have been too slow for us to meet the annual estimates forecast by USDA. This week we shipped 7.9 million bushels, but we need to be doing 24.5 million.

On a cumulative basis, we have now done 50 percent less than last year. Not good. Blame this on high prices.

Beans different story

The soybeans are another case, with exports there running 41 percent above the expected pace. That gets us to transportation, where the talk still centers on the low Mississippi River water levels.

Talk has been that we will try to remove rock in some areas to allow barges to operate normally. This goes beyond normal dredging. The Corps of Engineers is hoping to maintain shipping into December. We need a major winter snow season and a lot of spring snow melt to return shipping to normal.

The impact on grain prices is that, if barges cannot operate at full levels, freight goes up.

And then there’s D.C.

The politics angle is another matter. Put this in the category of “unsettling.” It is hard to put a price on what effect going over the so-called “fiscal cliff” has to do with grain. Still, every comment sheet lists this as a worry for prices.

I personally do not have a handle on this. Is it the concern that the cliff would hurt our dollar and interfere with exports? Is it lack of confidence in our government that bleeds into lack of confidence in our economy? Is it just the knowledge that big things are happening and we are not sure what the results will be?

Is it that someone else understands this better than me?

Take your pick, but beware that this is not just a macho measuring test between our President and our Speaker.

South America

South American weather continues to be too wet. This week the feeling was that they were going to be drier for their planting season, but that has not happened yet.

So far this is not a big factor, but it is being talked about because the impact on production can grow.

Current market

Prices broke sharply during the day Monday on the Board, but some of the losses were recovered before the end of the day. March corn futures were off 12 cents at one point, but finished down just over seven cents.

The January soybeans were off 19 cents, but finished a positive two-and a half cents.

Prices showed follow-through to the down side in early trading, but as the USDA Supply and Demand Report has hit the market this Tuesday morning, prices are more positive.

Traders were anticipating higher carryout in corn, but it has not happened as they thought. The average trade guess for corn left at the end of the marketing year was 666 million bushels.

Remember, this is tight, with 1 billion being the comfort threshold. In fact, the report came in at 647 million bushels.

The soybean U.S. carryout is now estimated at 130 million bushels, which is actually 5 million lower than the average trade guess. USDA actually did not change the corn from the November report, and lowered the soybeans by 10 million bushels. So, trading prices remain a little murky, with the next real news due in the January Inventory Report.

(Marlin Clark trades producer and elevator grain from an office near Andover, Ohio, for Town and Country Co-op of Ashland, Ohio. Comments are welcome at 440-363-1803.)

About the Author

Marlin Clark trades producer and elevator grain from an office near Andover, Ohio for Town & Country Co-op. You can reach him for comment at 440-293-4055. More Stories by Marlin Clark

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