Back in the dark ages, when I got started in this business, It was a big deal for prices to move a couple of cents in a day. Prices tended to move a fraction of a cent, and the casual trader never felt threatened by big changes. He could see them coming.
As they say, that was then and this is now.
Yesterday corn futures on the Chicago Board of Trade were up nearly 23 cents, the soybeans were down 42 and a fraction, and the wheat futures were up more than 25 cents.
Sounds like a big day, right? Except, nothing much really happened. Prices changed that much and it was a ho-hum.
Oh, if you were on the wrong side, it was exciting for you. It was real money changing hands. It was just so common place that it does not draw any particular comment. Prices are now so volatile that it is hard to react to what is going on.
What was the reason for price change yesterday? Blame this one on export news and planting progress. Soybean exports are lagging, with competition from other countries being the factor.
Prices are now so volatile that it is hard to react to what is going on.
I am having trouble rationalizing that it is the Argentine farmers’ strike that is keeping crops from going to town. It must be what is already stored and in the pipeline that is hurting, or that the Brazilians are not being affected.
Corn progress is another, real matter. It feels like northeastern Ohio is off to a great start, with crop planting in full gear for a week now. We must be the only ones. The nation as a whole has planted only 10 percent of the crop, against an average recently of 35 percent.
The trade had expected the Planting Progress Report, out after the close Monday, to show 16 percent, and the market reacted by taking futures 22 3/4 cents higher. In fact, the number was only 10 percent, and the overnight trading has prices up another 9 cents.
Could be a wild day, or could be most of the move was done yesterday.
Is the switch on?
The corn delay has traders worried the acres will switch to beans. That would exacerbate the action we have seen since USDA told the trade we were planning to take bean acres up, corn down.
Since March 20th, before USDA’s Planting Intentions Report, December futures have gained $1.20. That used to be half the price of corn. December futures were 5.21 1/4 on the low, then hit highs of 6.28 1/2 on April 9, 6.31 3/4 on April 17, 6.31 again on April 28 (Monday), then a new all-time high of 6.41 1/4 overnight in reaction to the Planting Progress Report.
Mix in the weather
Adding to the fears of smaller crop caused by delayed planting is the 10-day forecast that is predicting two weather events in that 10 days.
This is the time of year for weather rallies, and we are having one. Unfortunately for the hedger, we are having it on top of other events that have us at record highs.
While this has been going on, May soybeans since early March has been a roller coaster that put in a 15.77 high, lost $4.55, gained $2.77 1/2, and lost $1.25 1/2.
Wheat futures have lost about $5.50 in the May and over $4.50 in the July in the same time.