A hint of better grain prices this morning

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Prices are modestly higher on the board of trade this Turnaround Tuesday. It remains to be seen if we have hope of a trend change to higher prices, or if this is just a blip in the sharply lower trading we have seen the last few weeks. It is hard to imagine better prices, but there is always hope.

Trends on all three major commodities we watch closely have been down for six weeks. Any day in which we start out on the positive side gives thought that prices can finally get better. Two weeks ago there was a hint for corn, but it went away.

What’s happening

This Tuesday morning March Chicago corn futures are up 4 cents, at 3.73 3/4. March soybean futures are up 10 3/4 cents to 9.70 1/4. Not to be left out, March Chicago wheat futures, the weakest commodity in recent weeks, has posted a 4.99, and is now just a half-cent below that, up five and three-quarters for this Tuesday morning.

For some reason, Tuesday is often the day prices turn around on the board, so that adds to the hope that this is a change. We certainly could use it.

The March wheat lost $1.84 1/2 from the high Dec. 18 at 6.77 to the low Monday at 4.92 1/2. March soybeans lost $1.06 1/2 from the high Jan. 12 to the low at 9.55 on Jan. 30.

The beans win the contest for the fastest big loss. March corn lost nearly 40 cents from the 4.127 high on Dec. 29 to the low of 3.67 1/2 on Jan. 4. The corn gets the prize for the most recent loss.

Finding good news

So, we are poised for some good news. We have to hunt to find any, but if the market turns, we will be able to look back and find reasons for the change. That is the nature of the beast, or at least, the way analysts work.

Outside news right now, that is, news from other markets or geopolitical news, contains some nuggets. Crude oil has been up more than a dollar a barrel each of the last two days. This gets us back over $50 per barrel.

The news domestically has been that orders for new and replacement drilling rigs have been cancelled recently. This is a reaction to lower prices, which are good for farmers, but bad for the oil patch.

The drillers cannot apparently afford to drill the shale at under $50 a barrel, and maybe the real number is higher than that. Certainly, having curtailed some production, prices will have to get higher to inspire an expansion in drilling again.

In the meantime, refineries representing 10 percent of domestic production have been struck by the unions. They are flexing their muscles at a time when perhaps they think we can afford it. It remains to be seen how much production is lowered and how this affects product prices.

I bought gas for $1.499 at the Speedway in Warren Saturday with the help of a 30-cent Kmart coupon. I very well remember that as a benchmark as we watch the price pendulum swing the other way on current news.

Squeeze in Russia

In news closer to our crops, we see Ukraine still maintaining exports even as Russia is trying to limit exports with new export taxes. They are trying to hold back to limit the rises in domestic prices.

The Russians are being squeezed by inflation driven by the collapse of the Ruble. That collapse is driven by economic sanctions put on them by the EU and the US in the aftermath of their Ukrainian invasion. Putin is doubling down on the invasion, with more territory falling to the Russians even at this moment.

Planting report

We look forward to direct news that affects our crops, but will get little until the March 31 USDA Planting Intentions Report.

Currently thinking is that the corn acres will be several million less than what we had in the last crop. What remains to be seen is if this thinking is, as we say, “in the market.” If traders are already assuming lower acres, but prices are barely fighting off further declines, my lack of real bullishness becomes very real fear of a new low.

These are hard times to make decisions, and most farmers have deferred decisions and are just storing for higher prices.

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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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