Take a good look at the grain markets today and it is hard to find cause for celebration. Prices are fickle, news is scarce or negative, and the calendar shows we are nearing the end of the year with the farm bins still mostly full.
Still, ’tis the season to be jolly. We finish the week with the biggest holiday of the year. We finish the week celebrating the birth of our Lord and Savior, with the cross of redemption casting a shadow over the cradle.
Be jolly in the markets right now is to be thankful that prices are not lower. Some parts of some days they are.
I am struck by how erratic corn prices, especially, have been. Talk to a farmer about corn being down 4 cents, look back at the screen and we are up a couple. As I am charting this morning I notice the swings in March corn futures. On Dec. 16, we had a high of 3.77 3/4 and a low of 3.69 1/4. That is eight and a half cents.
The next day we were 3.75 to 3.62 1/2 for a range of 12 1/2 cents. The day after that we were higher, at 3.79 1/2, but were also 3.72 3/4 — a six and three-quarters range.
Take a break for the weekend and here we were Monday again, with a range over 7 cents again. We closed closer to the low, at 3.72, right now, on Tuesday morning we are unchanged to fractionally higher.
These swings represent the mood of a market that reacts to little bits of news in opposite ways. At the same time there is no big news to establish a direction. Lots of times we start getting smaller and smaller ranges as a market changes direction. This forms a pennant, and the point of the pennant points higher or lower.
The current March formation reminds me of my mother looking at the stars. She said she didn’t understand how people thought they saw the same star formations — you could connect the dots and get anything you wanted!
When you connect the dots on the January soybean contract you notice some sharp swings there, just not each day. The low was 8.44 1/4 back on Nov. 23. We quickly bounced to a recent high at 9.09 3/4, then back to 8.54 on Dec. 17. Since then we have bounced over 40 cents, to today’s morning high of 8.95. We are currently a tick under that.
Now, the March wheat futures. There we had a high the 18th at 4.99 after a low the start of the month at 4.65 1/2. That represents a third of a buck in gain. The high was made after the market consistently made highs above 4.94 for six days. During those days we saw large ranges, but kept getting back to the high. Then, we dipped badly to 4.72 1/4 on the 17th. Currently we are trading 4.80, up one this Tuesday morning.
Take you pick of what news is current that may be the reason for current price erractica. Friday’s Cattle on Feed Report from USDA shows placements at the lowest November number since records began nearly 20 years ago. This should encourage the cattlemen, who are now suffering low prices in their nine-month normal production cycle. It is not, however, conducive to high corn prices.
China importing ethanol
On the other hand, China just set a record for ethanol imports. In November they took in 135,865 tonnes, up from 26 tonnes last year in November, and up from under 69,000 tonnes just last month. Not sure what is going on here, but right now it is good for us.
I keep preaching that the ethanol market is mature, based on the fact that we are now maxing out the ethanol we use getting gasoline to 10 percent, and based on falling (until recently) usage. Now comes news of China demand, and I don’t know if this is a fluke, or it they are getting into the gasohol business.
We used to drool over possible corn and bean exports to them, and they happened. This would be a new windfall.
Beans in Brazil
The soybeans are seeing conflicting reports from Brazil. On the one hand, Mato Grosso is so dry that 40 percent of the drop is rated poor or very poor. On the other hand, the Brazilians have increased acres so much this year that they are still expected to raise a record crop.
Then, we have wheat, which has been trying to rally. The good news is weekly exports above expectations. The bad news is that the soft wheat market, ours, continues to suffer from large stocks and little demand.
So, celebrate Christmas and the New Year, then get serious about selling grain. The magic number for corn is $4 on the farm. Cross your fingers. Some days it seems inevitable, and some days it seems impossible.
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