I have more grain market questions than answers


So, it is a typical Tuesday morning.

Here at 9 a.m., I have made the fresh-ground one-third real Colombian Supreme and two-thirds decaf hazelnut coffee. I have turned my contracts in to Bruce. I have talked to a dog food plant about a misapplied ticket and to a trucker about pickup numbers. I have talked to an elevator about some confusion in my pickup numbers, which is probably my fault. I might as well admit it, because the customer is always right. Of course, I am the customer, too.

Now I can’t put it off any more. Now I need to finish my column for the Farm and Dairy for my 9 a.m. deadline, stretched to 9:30, stretched to “Susan, can you live with 20 more minutes this morning?” It has become a race for which is the last white space to be filled in her paper, the space for her column or mine. (Editor’s note: Dangit, Marlin beat me again.)

Same old

Putting it off has become a habit as this market has developed. Time was, there was so much grain news and so many ideas how the news would affect the market that I could pick and choose what to write about.

Now, we are into the third or fourth month of a market that trades grain based on financial and political news. Try to figure that out.

Last week, I was forced to confess that I was premature in saying the lows were in for corn and beans more than a month ago. The fact that the prices had collapsed again were self-evident, so confessing my confusion at least gave me something to write about.

This week I am glad I did, as prices went lower in all three grains.

Is the low in yet?

Now comes the hard part. We have put in a good bounce once again. Do I stick my neck out and say the low is in? I am safer now, since the harvest is essentially done (except for the Snow Belt).

Still, the bounce once again seems to have nothing to do with grain news. The Dow is better, the Big Three automakers might get a bridge loan (not a bailout, unless you think they cannot return to being competitive; oh yeah, I guess it is a bailout disguised as a loan.)

So, the grain prices are higher, and the low is in, I guess.

The low ended up being incredibly low, especially if you care about the cost of production. The ugly truth is that the market does not care, in the short run. I care, because I don’t have a business when my customers do not make a profit for a long time. I hope that time is not long this time around.

The low, if it is here, came Friday with a thud. March Chicago corn futures were down 2434 cents for the day, to 3.0512. Monday they were up 2034. What a difference a day makes!

We are now trading at 3.2634. That would feel good if we had not seen 8.16 the end of June, and 5.83 the start of harvest. The nearly $3 drop has come as we have melted down the equity markets in New York. Our focus has been on New York, not Chicago.

January Chicago soybean futures hit the skids Friday at 7.7614. This is lower than we were in August, 2007. By the end of Monday, we had seen 8.2712, over 50 cents higher. We are now trading on the overnight, before the 10:30 EST open, at 8.0914.

March Chicago wheat futures are at 4.9114. We made the contract low Friday at 4.55, then bounced to a high Monday of 4.8112. Again, this is a lovely bounce, and an ugly low after 12.84 in March and 9.57 in August.

Following the crowd

Grains are trading as generic commodities. Crude oil is down, gasoline is down, ethanol is down, the demand for corn and the price for ethanol is down. Result? Corn prices are down.

Grains are not going to fight the deflation in commodities in general. So, the bounces will not take us back to the summer’s stratosphere. I hope it will take us back to profitability.

Get our Top Stories in Your Inbox

Next step: Check your inbox to confirm your subscription.



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.