Conflicting seasons, and conflicted grain markets


I have a local indicator for the end of winter: The sun finally sets on Windsor Road.

Windsor runs straight west, and on the right evening, the sun sets between the trees in the middle of the road. This marks the middle point of its annual travel.

In the winter it gets far south. In the summer it gets far north. The first day of spring the sun sets on Windsor Road.

Tell that to weather-maker

There are conflicting signals this year, however. Winter is over by the sun, but we got five inches of fresh snow yesterday. In the afternoon, the snow was melting off the steel roof of our house, but still falling in the backyard.

Crocuses briefly showed color a week ago, then disappeared under the snow. The daffodils have not peeked through yet. A confused ’possum staggered down the walk behind the house yesterday afternoon. Usually I see him under the bird feeder at night.

Markets confused, too

The grain markets are putting out conflicting signals, also. The time has finally come, Thursday, for the USDA Planting Intentions Report. Also to be released is the Grains Stocks Report. Both may dramatically affect prices. Or not.

Traders are preparing, watching private forecasts and adjusting prices for what may be coming. In the process corn has gone up and soybeans have gone down.

Corn has rallied on the idea that the corn acres will decrease and the beans will increase. The average trade guess is for 97.328 million acres. Traders look for soybean acres planted to be 78.394 million, and the stocks to be at 947 million bushels.

The trade expects March 1 corn stocks to come in at 5.03 billion bushels.

Analyzing the numbers

Watch the reports, then watch the reaction, then try to rationalize the results.

Corn prices are analyzed by fundamental and technical processes. The numbers we will see Thursday are the fundamentals that we will trade for awhile.

Meanwhile, the technical analysis goes on in corn. There, we saw a reversal signal this week when corn traded lower, then higher and closed higher than the day before. We have been mostly higher for 12 days.

Watching the corn, the bull would say we are headed higher. While that seems to be true, there will be a reason why we stop, and that could be the reports.

The news could be bullish, but not enough. We could trade corn higher on Thursday after the reports, then look around, say the news was already in the reports, and go lower.

Or, USDA could disagree with the expectation for lower corn. Or, more extreme, we could see USDA with an even lower corn acreage than the trade expects going in.

Aim for a target

This is an environment ripe for the use of targets. I told a farmer yesterday that he should give me targets now. They would either fill before the report, or after, or not at all! Shows you how positive I am of my opinions right now.

The truth is, the market is anyone’s guess. I am guessing that the current corn rally, that has May corn futures up to 7.30 this Tuesday morning, when they were 7.34 briefly Monday, has run its course without a surprise Thursday.

I look for lower prices after the report, but maybe after a new recent high. I would be pleased to be wrong, and see the rally continue.

Unsettled soybeans

The May soybean futures had a recent high on the 8th at 14.84 3/4. Ten days later, we were as low as 14.04 1/4. A three-day bounce got us to 14.51 1/2. We are currently trading 14.39.

Call this all unsettled, and looking for direction. We will get direction Thursday out of the reports.

Late planting?

Meanwhile, it is not too early for the markets to start talking up delayed planting. Winter has lagged over much of the Midwest, not just in northeastern Ohio.

Now it is time to start planting in southern areas of the Corn Belt, and the forecasts are for cool and wet conditions that would prevent it. We anticipate lower temperatures than normal, and much higher precipitation.

The traders would love to trade this weather, regardless of the Thursday reports.


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