Small gains stabilize grain markets

Grain markets have stabilized on the Chicago Board of Trade in recent days.

That is a nice way of saying that we have seen small gains after large losses, without a real sense of direction being established.

Market moves

December corn futures have retraced nearly a third of the large loss. We fell from the high of 6.05 on Nov. 9 to 5.06 1/4 on Nov. 23. That is nearly a dollar in a few days, and it filled the gap on the chart.

In the week since, we have gotten back over 30 cents to the current overnight trading at 5.36 3/4, touching 5.45 at one point Monday.

January soybeans paint a similar picture. The high was on Nov. 12 at 13.48 1/2, but the close that day was the low of the day, at 12.69, so, we had nearly an 80-cent range for the day.

The drop continued until the 17th when we posted 11.75 1/4. That is a drop of nearly $1.75. A rebound took us to 12.62 1/4 on Friday. We are now trading at 12.34, which is up nearly 60 cents.

That is basically a third of the drop, similar in proportion to the corn chart.

December wheat, meanwhile, dropped $1.43, but has been up 33 cents in small increments the last eight days. We are currently trading 6.50 3/4.

Finding meaning

So, what do these market moves mean? It is easier to talk about them from a technical aspect than from a viewpoint of any real insight.

Technically, markets tend to retrace one-third or two-thirds of their major market moves. That has now happened in corn and beans. We crashed, then bounced back about a third of the crash.

So, from a technical standpoint, we are now clutching at straws, looking for more clues.

No imminent triggers

Will we see this more bounce? Will we make one more leg up in the markets? To move higher requires some strong fundamental trigger, I would think.

The adjustments we have made the last two months have been based upon the fundamentals of change in the estimated crop size and some tinkering with demand ideas.

The next market mover on the calendar does not come until the January USDA Inventory Report, which pegs the final crop size. There could be a surprise, but it is hard to believe.

That means, if there is a fundamental trigger on the horizon, the next one we can count on is way ahead at the end of March. That is the Prospective Plantings Report.

After that, comes early spring weather concerns leading into planting.

There are things that can happen in the meantime that effect supply and demand, but they are windfalls, not calendar-based expectations. We can have political upheavals, such as an escalation of the Korea mess. We can have hiccups in oil production. We can have dollar-to-euro changes. None of these are likely, just possible.

Wait ’til spring

gSo, expect that the market will change for better or worse in the spring.

In the meantime, I don’t expect much excitement. If this break holds, we can expect a slow decline in prices as we look for fundamental reasons why we should be historically high after huge crops.