Watching the grain markets these days is like watching that optimistic kid digging through that pile of manure: There must be a pony in here somewhere!
Somewhere in the pile of manure that is the Chicago Board of Trade these days (I am waiting for their representative to Google this and give me a call!), is a marketing pony. Somewhere in there is the reason why prices should go higher, right?
If you are optimistic, keep digging. Or, as the plaque my wife gave me in the farming days says, “Pray for a good harvest, but keep on hoeing!”
It remains to be seen if the marketing manure hides anything right now. It was exciting for a day Monday when corn was up 8 cents, beans were up 27, and wheat was just off a penny. It felt more like all manure when the overnight trading took those gains back away.
The easy answer for the volatility was that the trade saw some encouragement in USDA Supply and Demand Reports from Monday. Then, they were discouraged that the Dow was up 200 points, lost it, and finished down 73. Once again, those dreaded outside markets.
If there is a trend in this mess, it is cautiously higher on the beans, sideways in the big range on the corn, down in wheat.
The wheat continues to be hurt by growing world stocks. The beans are getting away from harvest, and there is a natural trend to go higher. The corn is having trouble finding a clear direction.
Locally, the corn yields are mostly good, with farmers sheepishly admitting that they have seen 300 bushels per acre on the yield monitor, and they have had a lot of 200 bushels plus field yields. Some are saying they might average 200. There is a whole lot of 175-bushel yield acres, with just a few isolated complaints.
The beans were more toward average, which was disappointing for the year. Dry weather at the end of the growing season hurt, and there were problems that were not apparent until the combines rolled.
USDA now puts the corn crop at 12.02 billion bushels, 13 million lower than they estimated just a few days ago. That is slightly positive for prices.
However, they have revised usage so the carryout has been increased to 1.124 billion bushels. One billion is considered very tight these days.
Significantly, they don’t show a lot of increase in usage for ethanol. We used just over 3 billion bushels this year, will use 4 billion next.
We were on pace for more than that, but there is trouble in the ethanol patch. Just this week a major producer with multiple plants went belly up. Summer corn prices, then a drop in ethanol prices has crushed this business.
USDA has left the carryout for the soybeans alone, at 205 million bushels. This is considered tight, so can help prices.
Looking at the numbers recently, corn can be considered sideways, but in a 60-cent range. The recent high for December futures was at 3.64 Oct. 27. We quickly gained 67 cents to the 4.33 high Oct. 30. Then, we lost 61 cents in 11 days before gaining 6 cents back.
Depending on the day, it did not seem sideways. It seemed more like a few turns on the Blue Streak.
The January bean chart looks like it has an uptrend, but that remains to be seen. The low was in the middle of October at 8.34 1/2. It then went 1.47 1/4 higher to 9.81-75 on Nov. 4. We have lost 56 1/2 of that recently.
Volatility is the name of the game. These changes look like a lot until you put them on a chart.