It is one of the accepted rules of grain trading that the futures markets are slow during the holidays. Not so much, this year. In the short week before Christmas this year, March corn futures gained 131⁄2 cents. January soybean futures gained 431⁄2 cents. Markets were mostly higher for the last two weeks.
Continuing that trend in the week between Christmas and New Year’s, normally a really dull trading time, we made new contract highs in corn and soybeans Dec. 29. March corn touched $4.571⁄4 before softening to the $4.561⁄4 trading. March soybean futures were down four and three quarters of a cent, but made a high of $12.563⁄4, a new contract high, early in the session overnight.
March Chicago wheat futures were off a penny at $6.131⁄4, but traded $6.171⁄2 earlier. It should be noted that is not near a contract high, which was actually $6.373⁄4 in late October.
Grain prices in general continue to be beneficiaries of good health news. COVID-19 vaccines are here, and coming, and starting to gain in the number of people vaccinated. It is starting to appear that it will be the end of the first quarter of the year before the vaccine is generally available, but optimism is in the economy.
Grain prices specifically are benefitting from export news and related South American news. Yes, the South American soybean crop was delayed by planting that waited for rains. That gives the U.S. an additional month or so to be the supplier to the world. The continued spotty rains threatens the size of the crop, which is being watched carefully.
More important this week is the fact of multiple strikes at ports in Argentina. It is reported that more than 120 vessels are waiting to be loaded with meal, corn and soybeans in Argentine ports. Port workers, grain inspectors and soy processing workers are all striking. The strikes, and very slow selling by Argentine farmers, is a result of the collapsing value of the Argentine currency. The farmers don’t want to sell a devalued product. The workers don’t want to accept a devalued wage.
The strong corn market is a reflection of strong export demand, as quantified by higher Gulf values. It is also following the soybeans, as we are already seeing a struggle to compete for acres. We may run out of soybeans this summer because of export demand. That demand comes from a hungry China, and because of an increased opportunity to compete with South America for a declining and late crop.
As soybeans are bled out of the country, we anticipate a need for more planted acres. However, corn at these prices competes very well with soybeans. Fertilizer sales this fall indicate a high level of preparation of fields for corn planting. So far, it is hard to see how the soybean markets get the acres needed.
Chicago wheat futures made big gains this week, up 18 cents. March Chicago wheat futures made the contract high Oct. 26 at $6.373⁄4. We dipped to a low of $5.651⁄2 Dec. 7, but rallied to $6.333⁄4 Dec. 23. That is a 52-cent bounce off the recent low.
For the first time in several years, traders have turned bullish on wheat and expect higher prices. That remains to be seen, but it should be noted that the current weak dollar, weakened by Uncle Sugar printing money for economic support reasons, is making our wheat more competitive in world markets.
Nearly 60 years ago, Sen. Everett Dickson made the famous remark that, “A million dollars here, a million dollars there — pretty soon we are talking about real money!”
In recent years, that quote has become common as “billions of dollars.”
Sadly, this is the year it became about trillions of dollars.
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