If you drive down state Route 46 north of the Eastwood Mall, there used to be a sign for a “reader and advisor.” You see one of those once in awhile. Used to be one on Route 20 in Ashtabula. What I have never seen is a lineup of farmers out front, wondering when to sell their grain.
Maybe farmers don’t want to be seen in front of a glass globe in the company of a gypsy, and make arrangements to go in the middle of the night. Maybe they are worried about where the power comes from to predict the future. Hitting the top of the market is nice, but going to hell is not.
Maybe they are more into tarot cards or tea leaves. Maybe they are home with the neighbors, stirring the chicken entrails.
Now, I have to tell you that I don’t know how that is done, but I may have to learn. Everyone expects me to tell them the future, and the future is murky to me.
Take corn, for example. I told a farmer yesterday the March chart looked good for some gains. There is a big gap from back in early October, I told him. The charts almost always fill their gaps. That would mean a bounce of 50 cents or so.
On the weekend after Oct. 10th, we gapped from 4.87 to 4.66 1/2. The date will reveal the cause — USDA Crop Production report that was a surprise.
The trouble is, I can look at the last three weeks and make just as good a case for corn going back down. After all, we made a low at 3.05 1/2, a whole $1.82 below the start of that gap, then raced higher. From Dec. 5 until Dec. 29, we gained $1.18 1/4, to 4.23-3/4.
Now that we are back in the fours on futures, we can look for that next 50 cents, or we can expect a retracement to the 3.50s. And, I have no idea which. It’s probably right there in front of me if I just get some neighbor to butcher a chicken for me.
The biggest problem right now is that we have lost demand. All commodities, farm and nonfarm, are trading lower. Gas is lower, so ethanol is lower, so corn demand and prices are lower.
Except for the occasional export report, we have no fundamental news until the March 31 USDA Planting Intentions Report.
What can we expect from that? Farmers tell me they are trimming corn acres because of cost. Don’t bet the farm on that happening nationwide, however. Big acreage changes don’t happen. Oh yes, that’s right — it did happen two years ago.
So, maybe we get the big revision down this year.
The current corn prices do not support the current fertilizer prices, even though they have declined. I am so old I remember $62 potash, and I don’t recall getting rich with that price.
Soybeans are also a confusing issue, but with more potential fundamental news. March will see South American bean harvest, and going into that we can have some fundamental news.
January futures have gained over $2.25 in the last month, so we have a situation similar to corn. In the case of beans, we are just filling the gap left in early October. We are poised for a breakout, or, we have just made the high and are ready for a correction.
Go hunt me a chicken, and we will talk.