It may be that the long weekend has helped prices on the Chicago Board of Trade. This morning (Feb. 16), prices are higher in the early session, negating the small losses we saw in grain markets on Friday. For many of us, the holiday that mattered was Valentine’s Day, but the holiday that affected the market came on Monday in the form of Presidents’ Day. The result was a three-day weekend.
The long stretch without trading can always affect the flow of the market. Sometimes the net is nothing, as prices may decline on Friday, then get that loss back Tuesday. Today, Tuesday, we are seeing grain prices modestly higher, and higher than we were trading on Friday. The March corn futures are up two and a half cents after being down one and a half at the close Friday. The March soybeans are up 5 cents after a loss of 3/4 of a cent Friday. March Chicago wheat is up four cents after a three-quarters cent loss Friday.
In corn, the gains came overnight, and presumably as a result of the Friday Commitment of Traders report that put large spec funds short an estimated 156,000 contracts as of the 9th. It is a move in the right direction, but there are market forces that will likely limit the move.
First, there is technical resistance at 3.64 1/4, which is the ten-day moving average. We are now trading 3.61 1/4, comfortably below that resistance.
Second, corn sales are lagging. We will have exports reported today, but the trade believes we are falling behind projections.
Third, the principal South American producers of Argentina and Brazil are forecast to receive welcome rains.
The gains in the soybeans come in spite of what is mostly negative news. That same Commitment of Traders Report showed specs increasing their shorts by more than 40,000 contracts over the previous week.
Production in South America continues to bring negatives to the market. Previously it was thought that the yields would be poor, but increased acres would bring about a record crop. Now comes news that the harvest so far is even larger than anticipated. One analyst has raised its production expectation for Brazil to 99.7 MMT. Another has the Argentine estimate now up to 58.8 MMT.
Hurting bean prices is the news that the Chinese in January imported 38 percent less than in December, and nearly 18 percent less than this time last year.
Wheat markets are dominated by the realities of large world-wide supplies. We are trading at the bottom end of trading ranges, and we are near five-year lows for wheat. Friday the March Chicago wheat futures were at 4.57 1/2, down three quarters of a cent. This morning they were up four. The recent high was at 4.88 1/2 on Jan. 26. That makes our Friday close 31 cents below the recent high. Our recent low was on the 12th and the 9th, at 4.55. We are just above that, and trying to hold above the lows. We are in the middle of February now.
The end of winter is in sight, and the end to the winter price doldrums is not. We need news to spark this market. Although we are positive today, there is not much news to hold these small gains. We still have no real bullishness that would pull us up to the price levels farmers are looking for right now.
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