Grain markets: Farmers bullish, but traders’ thrill is gone


I can hear B.B King wailing as he strums his guitar Lucille The thrill is gone…

The thrill of buying cash corn is gone for Ohio traders I talk to regularly.

“It is dead here!” is a typical comment.

Grain is not moving, and the phones are not ringing. The rush to move grain has faded as the business that was deferred to the new year for tax purposes is gone and prices have declined.

Farmers bullish

Farmers think that $8 corn was here and it will be back. Traders, this one included, think that with a short crop, the high is at harvest and it is gone.

The result is that cash grain movement has slowed. The lines that came from the deferred selling have gone away. Farmers have cash in hand and are in no hurry.

Elevators have marketing meetings scheduled, and early results from them are being talked about in trading rooms everywhere.

$4.50 corn

The traveling experts are worried that we are going to raise a big crop and have $4.50 corn. The farmers don’t believe it.

The ugly truth is that we are already half there. The December futures are now almost $1.40 lower than the March futures. If you allow for 20 cents or more is basis difference, you have $5.10 corn for new crop and 6.70 for old. That is a huge change, and reflects the traders’ views that the next year is going to be a lot different from this one.

Yet, the farmers have some reason to believe they are right. We are technically still in severe drought in much of the country. That is not likely to change much.

Ohio, Indiana, and Illinois have been recharged this winter by cycles of snow and thawing, which did more for soil moisture than a cold winter would have. Farther west was not the same. They are still dry.

So, we are dependent upon timely rains to make the crop this year.


Thing is, that usually works out.

The farmers are right that we are still in drought and could have high-priced corn again. The odds are, however, that we will squeak through. We have no pattern in history of two bad years together.

Working against the farmer is the downturn in demand for corn for ethanol production. The industry is looking to be mature, with more capacity than needed. Some 20 plants have shut down in drought-stricken areas for lack of affordable corn, and the market doesn’t care. There is still too much ethanol in storage for the prices to recover.

The recent uptick in gasoline prices will help eventually, if the up-trend continues.

What’s market say?

Now let’s look at prices for some perspective.

We had no trading Monday in honor of President’s Day. That long weekend can mess around with prices. Traders were focusing on the March to May corn spread, which had gone from a two-cent carry to a two-cent inverse. That is quite a change, and has to be sorted out in the next week as we will be switching to trading off the May futures.

March corn made a recent high on the first of February at 7.461⁄4. Following that ,came nine days down to a low of 6.871⁄4, a loss of 59 cents. We are currently trading 7.01 on Tuesday morning.

Meanwhile the March soybeans, which had been in an uptrend while the corn was falling, broke in price. They were up eight days to 14.983⁄4 on the fourth. On the eighth, they broke to a low of 1451, and made a recent low of 14.041⁄2 on the 13th. That is most of a buck down in less than two weeks.

This morning we are back to 14.47-1⁄4, and are up 23 cents for the day so far.


Up-to-date agriculture news in your inbox!



We are glad you have chosen to leave a comment. Please keep in mind that comments are moderated according to our comment policy.

Receive emails as this discussion progresses.