Most of the time corn and soybeans trade in sympathy with each other. It is rare to see one go up while the other goes down. It is common to see corn up a few cents on a day when beans are strong, or down a few on a day when beans are weak.
Currently corn and beans are at odds with each other, and we are struggling to explain this, let alone predict where we go from here. The new year is gone, and the end of year USDA Inventory Reports are at hand.
Thursday, Jan. 12, the day most of you read this, USDA will release several reports at noon. These include the final production report that we call the “inventory” report. Also released will be the Quarterly Grain Stocks as of Dec. 1, and the Winter Wheat Seedings report.
There is a tendency to not take any new positions ahead of these reports in case the traders see some surprise in them. Frankly, I don’t see what any surprise could be.
I would welcome a surprise to stir up this market, which is trying to find a reason to be higher and failing in the face of huge crops and disappointing exports.
Still, it is noteworthy ahead of the reports to watch corn trade higher, but soybeans trade lower. The cycles have gotten out of whack, and the corn is at the high end of the cycle when the beans are down.
Look at the corn first. The recent high on March futures was $3.64-3⁄4 Dec. 13. In ten days we hit the low of $3.451⁄2, then came back from Christmas to rally back to $3.623⁄4 by the fifth.
That was just two cents off the high. That rally has not held, but we are only modestly lower, at $3.58 this Tuesday morning, Jan. 10, down two cents for the day so far, and down almost five cents from the high.
The March soybeans, meanwhile, have done the opposite. The high was at $10.74 on Nov. 28. We confirmed that high by trading $10.711⁄4 on Dec. 6. Then, things got ugly.
We were mostly lower for a month, with the $9.921⁄4 on the 4th, and $9.931⁄2 on the 6th and 7th.
In between we traded $10.16 on the 5th, just to make you think a rally was starting. The big negative for the beans is the good weather and the growing crop in South America.
They grow more beans than we do now, and they are having a good year. Good weather has their internal crop estimate now at 103.8 MMT. This is up from a 102.45 MMT estimate, and significantly higher than the current USDA estimate of 102.0 MMT.
Even though it feels like our soybean prices have been weak, the recent strength, coupled with our stronger dollar, has slowed Chinese purchases. The demand has slacked for bean products, so that processors have faded their demand for beans.
Crush margins have deteriorated. While this trading has been going on, the traders have been looking at exports with a wary eye. We made a sale of spring wheat to the tune of 120,000 tons.
Overall, however, the wheat exports were termed terrible by one observer. The corn and beans were so-so, with the beans at the fifth lowest weekly export of the year. This is a continued weekly decline in exports.
The corn numbers were better, but we have slipped progressively lower in 13 of the last 14 weeks. We are now 121 million bushels behind our forecast.
Wheat, for all the negative news, has actually been rallying until the end of last week.
March futures put in a low of $3.93 on Dec. 1, then hit $4.203⁄4 by the 13th. By the 23rd we were back down to $3.923⁄4, virtually the same low. After the Christmas doldrums, we rebounded to a new recent high of $4.281⁄4 on the 9th, Monday.
This is the highest price since Nov. 22, but it did not completely hold. We are currently, again, on Tuesday morning, trading $4.241⁄4, down three cents.