Last week in this space we looked at the “outside markets” as an effect on our grain markets. Recently, they have been a dominating reason for volatile prices. Trading on Sept. 29 put an exclamation point on the effect non-agricultural, non-supply and demand factors can have on markets.
On Sept. 29, Congress did not pass the Wall Street bailout that the Congressional leaders don’t want to call a Wall Street bailout. As a consequence, the Dow was down most of 800 points, or something like 7 percent of value, and the grain markets crashed and burned. Crude oil was back below $100 a barrel.
The political dance that passes for bipartisan Washington was characterized by House Speaker Nancy Pelosi’s ill-advised scathing remarks before the vote that accused the Republicans of being everything but a crack ho. That was followed by her expression of surprise that they didn’t vote with her.
Blame it on the political bossa nova. Two steps forward, one back, one sideways, dip and squeeze.
I don’t have to look at closing comments from the Sept. 29 market to know what they say. It is all about the outside markets. What else do you say about a day where corn is down 30 cents, soybeans are down 70, and wheat closes just off the 50-cent limit?
Two weeks ago I was expressing surprise that we were bouncing off recent lows and maybe making an early harvest or pre-harvest low. Now, we really have made a harvest low, at least so far. Can you still remember the contract high in June, just below $8?
On the electronic trading overnight, the limit down was extended another 12 cents before bouncing back. We finished trading December corn futures Sept. 29 at $5.13, dropped to a new low of $5.01 1/4 overnight, then closed the overnight session back up at $5.21 1/2.
The November beans gapped to $10.94, still above the April low of $10.60, but we touched $10.61 1/2 overnight. Remember the $16.35 high in early July?
The December wheat traded a low of $6.66 (an ugly number), then dipped another 4 cents overnight. Wheat, however, did rally $0.14 1/4 overnight. That leaves us bouncing on the same low we have had several other times, but a year ago. All this excitement and we are back at the Oct. 3 low of $6.66 after the March high of $12.84.
What a year! And, with the political funny farm season still running, we can give up on following grain prices right now because they don’t mean anything. Of course, you still have to use them to pay your bills. Given the credit crisis, your bank needs your money back more than ever!