Grain market rebound leads to USDA report


The fundamental news that lays the foundation for the entire marketing year is due in two weeks, as this is written.

Grain markets on the Chicago Board of Trade are preparing for it with some interesting trading. As we wait for the USDA Planting Intentions Report, which is due March 31, we are seeing bullish enthusiasm return to the markets.

Corn and soybeans have rallied sharply the last two weeks, a matter that is either encouraging or confusing. Talk to me April 1 and we will know who the April Fools’ joke is on.

A corn switch?

For several weeks, I have heard myself telling farmers that the Planting Report was crucial, and that we could have some changes because of it. My bias is that we will cut the corn acres from last year and add to bean acres.

Put this down as a necessary reaction to corn prices that have dropped relatively more than the cost of production. It was one thing to spend $4.50 a bushel to grow corn that could be sold for $5.50. It is quite another thing as we have looked at prices more like $3.25.

Corn prices have been depressed due to lack of demand. Gasoline is down, so demand for corn for ethanol is down and the price of ethanol is down. Hog, chicken, and pig numbers are down, as a reaction to high feed prices of last summer.

Locally, some farmers say they want to expand bean acres to save money. You can still find some who say they will make no changes. So, does this mean anything? Is this indicative of the nations’ crop, or just a local anomaly?

It’s all in the spin

As usual, the key to the Planting Report is not what the numbers will show, but what twist we put on them.

A month ago I had a better vision. Now that we have rallied sharply going into the report, have we made the correction we needed? Or, will the report show we over-corrected?

The more we look at the marketing creek, the muddier the waters get. Once I could see to the bottom. Now I am looking at a stream that thirsty cattle have stood in to water.

For May corn futures, the recent high was at 4.39 1/2 Jan. 6. That was, in round numbers, a buck and a quarter above the contract low made in December. By the start of March, however, we had lost 95 cents, to 3.44 1/2. Early yesterday we had come all the way back to 3.97 1/2, a high that did not hold.

We gained 53 cents in two weeks, but are now back at 3.91. In the same time we gained 80 3/4 cents on the May bean contract. Of course, that came after we lost nearly $2.20. May soybeans were up to 9.19 once Monday.

If there is an acreage change, this is the last gasp for beans. If there is a change, does this rise in corn already reflect it, or is there more to come the day of the report?

Looking at the correction of the last two weeks can be exciting. Maybe we have started a major move. We are back to the levels that everyone set targets at just before the last break.

The magic number has been $4 on the farm for corn. Is this the time we get it, or the second disappointment?


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Marlin Clark is an associate of Russell Consulting Group, with a local office in Williamsfield, Ohio. Comments are welcome at 440-363-1803.



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