An obstinate and opposite market
I am thinking this morning that the grain market is like a sixth grade boy this morning — obstinate and opposite. Whatever you suggest, he wants to do the other thing. The more you push, the more he pushes back.
Think about it — we came out of reports that said we planted 4 percent more corn acres and 4 percent more bean acres and we made new highs. We started to dwell on tough growing conditions and locally poor stands, and we started back down.
Last Thursday we made a new high on December Chicago corn futures at 4.10. That was nearly 77 cents above the June 29 low.
The move was exciting, and short. It was also short-lived.
Three ugly days have us back down to 3.88 on the Monday/Tuesday overnight. That is 22 cents off the high, and counting.
Similar action is seen on the November soybean chart. The low there was July 1, at 8.94. We gained most of a buck, to 9.92 3/4 on Friday the 16th.
This Tuesday morning we traded as low as 9.66 3/4 again, 26 cents off the low in a day session and a night session.
Haven’t had enough to make your Wheaties taste dry? Look at September wheat futures on the Chicago Board of Trade. The low was made clear back June 9 at 4.42 1/2. We rallied an incredible $1.56 to the Friday high at 5.98 1/2. Monday and Monday night we lost 24 cents off that.
At the same time, the markets are going down, the chatter coming out of Chicago is that the crops are at risk to high temperatures and lack of rain. Also, the stands are not that great to start with.
So, it seems prices are not following what we are observing, but are going the other way.
Trying to rationalize that is difficult, but I will take a shot.
Timing is everything. What we conclude may be already in the market, or the market may be late reacting.
As producers were looking at the increased acres in the USDA reports, traders were looking at surprisingly reduced grain stocks in the same reports. While producers were worrying about corn curled up in the fields, traders were saying it was too late to worry about a big drought.
At the same time, the outside markets were turning against grains.
After a long period of the dollar gaining on the euro, the euro fought back this week. It is gaining again, either as a rebound, or as a change in mood. This hurts exports.
So, decisions are hard to make. I think the market returns to worrying that the record yields predicated on record early planting are suspect.
Here in Wayne Township in Ashtabula County, we have had rain forecast nearly every day, and continue to have it forecast for five more days. So far that has resulted in the tease of three 10-minute gentle showers in two days. The only thing growing in my lawn is the plantain.
No farmer is going to sell corn until it actually rains a lot.
(Marlin Clark trades producer and elevator grain for Keystone Commodities from an office near Andover, Ohio. He welcomes your comments at 866-293-4433.)