People celebrate the Martin Luther King holiday, but celebrations are limited so far on the Chicago Board of Trade.
Grain prices are lower in early trading Tuesday. Favorable weather in South America is given as the reason, but this is the kind of thing that happens over a long weekend.
The extra day brings more uncertainty to traders, who may get out of positions to get out of risk, then get back in with a bang when trading starts.
In this case, the long weekend seemed to be an excuse for soybean speculators to rethink the bullishness that came out of the Jan. 10th USDA reports.
All about the beans
As thinking developed during the week, traders stopped worrying about a surprise smaller corn crop final number and started worrying about the soybean supply being too tight for the summer season.
There is always something to worry about, and this soybean worry led to a high on the March chart of 13.301⁄2. This was a little ways from the late December highs four times around 13.39, but it was a move in the right direction.
That direction had us headed back toward $13 for beans on the farm. It was not to be, for this Tuesday morning we are now down 23 cents, at 12.931⁄2.
The market mover this morning is the idea of better weather in South America for the beans, which are well along right now. The early beans come off in early February, and they are spread out for a month.
I have said for a couple of months that the market would be limited by the likelihood of a big southern crop, and that is developing.
The other cap on bean prices is the idea that we will increase acres in this country this year. Plug in the idea of new crop corn and bean prices, and beans look better to a lot of people.
We have run the costs of production up by competing for inputs to increase corn acres. That makes $4 new crop corn (better price than old corn) look cheap compared to $11.25 soybeans.
The beans are a lot cheaper than the current old crop price, but a little optimism has them at 12 or 13, while there is little optimism for the corn.
Corn on defense
Recently, the corn prices have been defensive after one big day coming off the final production estimate by USDA Friday the 10th. The crop size was lowered, instead of going over the expected 147 billion bushels.
That gave us a 20-3⁄4 cent jump for one day, with a little follow-through on Monday. The high was at 4.331⁄4 that Friday, but is currently trading 4.22, down two cents this morning so far.
One old saw of the market is the idea that the bull move is over when good news does not make the market go up. In this case there was no real bull move, just a little report correction that seems to now be a hiccup in a down market.
Each time we make a new low ,I hope that is the year’s low. This time it was at 4.08 on the 9th.
Unfortunately, there still is only the hope of fewer planted acres to keep prices above that. That, and the idea that new crop prices higher than old crop helps pull the old crop up as the year goes on.
We remain susceptible to any old weather event that would affect new crop planting or production. Absent that, we could have really cheap corn for next year. Some marketing services are pushing to get some sold now.
The beans are a no brainer — get cleaned up. The corn is hard to sell at this price, but a good start is with some new crop.
On the big screen
On a personal note, Squeeze and I celebrated the holiday weekend with a couple of movies. As a Jack Ryan fan, I talked her into going to the new movie in that franchise.
We thoroughly enjoyed it, but I have to warn you gun nuts to watch when Kevin Costner sneaks a gun to Chris Pine in Moscow. It was quick, so I think it was a Beretta 92. I know the safety was off, as I could see the red dot. Sure, it was a prop gun, but that kind of thing is disappointing. Hard to believe Costner would do that, then be so good with a rifle later.
This has nothing to do with the price of grain, but I don’t live and die with grain prices, at least not anymore.