Volatile grain markets brace for USDA

Grain prices continue to be volatile on the Chicago Board of Trade. Blame current prices swings on traders preparing for the USDA Prospective Plantings Report while looking at private forecasts.

Recently corn prices have firmed, while soybeans prices have been sharply lower.

This started as a reaction to better South American weather. Brazil was too wet for harvest. The later crops in Argentina were to dry for the finish of the growing season.

As those conditions reversed themselves, the soybeans lost ground.

Less corn, more beans?

The last few days, the lower trend has continued, sparked by private planting forecasts that promote the idea that we will plant less corn than previously thought, and more soybeans.

Initially, corn prices broke in sympathy to beans, but they quickly started trading on their own.

May corn futures are at 7.201⁄2 this Tuesday morning as this is being written. That is up just a half-cent for the day, but just off the 7.21 recent high made Monday.

Corn has had its ups and downs, but is now firming up. We had a low on Feb. 25 at 6.803⁄4 May, then bounced to 7.123⁄4 on March 4. By the 7th, we had dropped back to 6.82, but the last seven days have all been higher.

May soybeans, meanwhile, have trended the other way. The recent high was on Feb. 22, at 14.97. The 26th saw a low of 14.301⁄2, but we bounced to a high of 14.843⁄4 on the 8th. Ten days later we were 80 cents lower, and are trading just two cents off the low this morning, at 14.063⁄4. So, we have lost about 95 cents very quickly.

Wheat

While this is going on in corn and soybeans, the wheat has interrupted its long down trend with a blip up.

The wheat chart has been a long slide to cheap prices, but talk of dry weather in the Plains has helped, although this week we are told crops are improving. May futures had a low of 6.81 on the 6th, but bounced to 7.251⁄2 on the 14th.

We are now trading 7.12, and thinking this is a short-term correction of a long downturn. Talk this morning is that worldwide we will produce the second largest wheat crop in history, even with some Plains problems.

Ready for report

Traditionally we look to March 31 as a big day on the commodity calendar. That day is frozen as the date for the USDA Planting Intentions Report. The 31st comes on Sunday this month, so we get the report on the 28th for a change.

We are gauging the market for some sort of reaction. With corn gaining and beans losing going into the report so far, we need USDA to confirm the private reports, or we could reverse those price changes.