So, where are we going on grain prices? The farmers are betting higher, and putting in targets that have stayed out of reach. The traders are watching the charts and the South American weather. They seem to think we have hit the ceiling again.
Grain prices on the Chicago Board of Trade have been mostly sideways the last few days. It may not seem that way, because we have seen some large trading ranges some days. But, if you back off and look at the charts, they look like the recent rises in prices have tapered off.
Take March corn, where we have rallied back for a two-thirds retracement of the losses after the Jan. 12 USDA reports, then traded sideways for eight sessions. The report day low was at 6.11 1/2, but we continued lower to the 5.92 1/2 recent low on Jan. 18. Since then we rallied 57 1/2 cents to the Feb. 1 high at 6.50. However, since then we have been as low as 6.34 1/2, and we are 6.43 overnight going into Tuesday (Feb. 7) after being close to 6.50 again briefly Monday.
The March soybeans have been stronger. They put the low in on the report day, bouncing off the low. In fact, on a 63 1/2 cent range they only lost 20 1/2 cents. They then rallied 81 cents to the Jan. 26 high of 12.31.
After that, they took a breather, dropping back to 11.84 1/4 before making a new recent high of 12.44 on Monday. Overnight they have slipped to 12.29 1/2.
Wheat futures came back from the report low the best. That may be because of good export news. After the 5.90 March Chicago wheat low on Jan. 18, slightly lower than the report day 5.90, we have rallied as high as 6.83-3/4. Now we have had three lower days, and lost 7 1/4 cents overnight, settling at 6.61 1/4.
The challenge this week is predicting price direction. We have little fundamental news until the March 31 Planting Intentions Report. That has us all staring at the charts, looking for telltale signs.
For the last month, the market has traded dry weather in South America. First it was too hot and dry. Then, we could expect rain, just when the USDA was already jumping on the prices. Then, the rain was disappointing.
The current news is no news at all. The weather reports for South America are for normal rain, normal temperatures. This is the “kiss your sister” news that has helped prices go sideways at best.
For now, it seems we need more news to feed the rebound bulls, so I am looking for lower prices. The farmers want one more shot at $7 corn. They should not bet the farm they will get it.